How to claim FIRPTA withholding?

Question

hey guys,

my client sold a property in South bend (IN) in June 2017.

she never filed income tax before in the USA. her ex-husband owned the house until a year ago.

during the sale process - buyer is withholding 15% of the sale price of 52,000$

the house was originally bought in 2014 for 101,000$. during years as rental - only lost money due to neglected management.

what should my client do?

how can she claim her money back? she obviously only lost money with this property.

thank you

Wayne Brooks · Answer

A CPA familiar with FIRPTA

Steven Hamilton II · Answer

One Item you will want to take into account is depreciation. And yes, it will be reconciled when they file a US Tax return. I'm sure @Lance Lvovsky can definitely help you out there.

Lance Lvovsky · Answer

Your client will need to file a U.S. tax return, Form 1040NR (assuming she is a Nonresident Alien) in order to claim the withholding back and get a refund. Contact a CPA who help with this filing.

Sam Shueh · Answer

She filed US income tax?

Lance Lvovsky · Answer

@Lior Reich I have dealt with FIRPTA before!

Also, I was in Tel Aviv last year in December. Loved it!

Lior Reich · Answer

@Lance Lvovsky any CPA you know that dealt with FIRPTA before? I would really use a referral. thank you!

Lior Reich · Answer

@Sam Shueh

@Wayne Brooks

@Tom Gimer

thank you guys for your quick reply, I am getting excited each time I get a response here on BP

my client is "Foreign investor" , but she never filed tax returns in the US (neither her - ex husband who was in charge of this investment till the divorce)

the property was SOLD

my main question - who should I contact in order to claim the withholding back? we want to pay for this service - But I do not know where to start?

Tom Gimer · Answer

Is client a "foreign person" under the US Code?  If so, the only way I've seen an exemption accomplished is to file for a withholding certificate from the IRS using Form 8288-B. This is not something that is typically obtained quickly.

How to claim FIRPTA withholding?

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