Wholesaling a foreigner's property dealing with FIRPTA.

6 Replies

Hello BP Community,

I have a slight emergency with a property I am wholesaling. The seller is Canadian, and therefore he had to file for a Individual Tax Identification Number (ITIN) via 8288's and W-7 to satisfy the FIRPTA requirements with the IRS, which the seller filed today (11/30). The 8288 form was filled out with my name on it as the buyer, because technically I am for the until I assign the contract. I also got a cash offer today and called my title rep to inform her that I would be assigning today, but she informed me I could no longer assign the contract because the FIRPTA forms had already been submitted to the IRS with my name on it. She is saying that I will have to close on the property and re-sell it to my cash buyer a couple days later. There has got to be a way to get around this and just continue to assign the contract to my cash buyer and close on my original closing date of December 14th. My first idea is to have my seller go back to the IRS with a new 8288 with my cash buyers info and just amend his filing?

Any advice or experience is tremendously much appreciated. I will also be calling the IRS first thing in the morning to see what can be done, but you all know how it is dealing the IRS when it's anything above their pay grade. 

Thank you all millions!

Billy Bell

Wholesale, Arizona, Tax Laws

You may be able to just do a double close on the same day, where you actually close on the first property and then immediately resell it to your end buyer. You'll need the funds for closing but can use transactional funding from a lender, which usually costs about 1% of the purchase price. As long as your buyer performs and buys it immediately, it's not a big deal. Only snag is if FIRPTA or whatever requires some time period before you can resell it. On that I have no idea. (None of this is legal advice.)

Good luck!

Originally posted by @Chad Benedict :

You may be able to just do a double close on the same day, where you actually close on the first property and then immediately resell it to your end buyer. You'll need the funds for closing but can use transactional funding from a lender, which usually costs about 1% of the purchase price. As long as your buyer performs and buys it immediately, it's not a big deal. Only snag is if FIRPTA or whatever requires some time period before you can resell it. On that I have no idea. (None of this is legal advice.)

Good luck!

Hey Chad,

That thought also crossed my mind, and i asked my title company about that and I believe i could hold it as little as 5 days, but the extra money to close twice and the transactional funding even if it was as little as 1% would take out almost all my profit. I won't have confirmation until i can call the IRS and title company again tomorrow, but i think if i can just get my seller to take a new 8288 down to the IRS with my cash buyers info on it and have them switch it out it wont be a problem. The only tough part there is motivating my seller enough to make a second trip.

Thank you for taking your time to share your advice! Much appreciated!

Originally posted by @Chad Benedict :

You may be able to just do a double close on the same day, where you actually close on the first property and then immediately resell it to your end buyer. You'll need the funds for closing but can use transactional funding from a lender, which usually costs about 1% of the purchase price. As long as your buyer performs and buys it immediately, it's not a big deal. Only snag is if FIRPTA or whatever requires some time period before you can resell it. On that I have no idea. (None of this is legal advice.)

Good luck!

I just realized I did my mental math totally wrong, well at least one decimal point off, and the 1% wouldnt eat up too much profit at all! So i will check i to that as my plan b tomorrow!

Thanks again so much!

Hello Bill,

Congratualation,  on your flip!

FIRPTA is a requirement with the IRS, you can not get around that. If seller(1) has SSN then they can apply for a waiver. 

Closing - The problem is not with the Escrow company but with Title co. You need to call your title Co. and see if they can walk both Deeds together and have them recorded same time. They will have to make sure both get recorded if there is a problem with the first one then everything must stop and get corrected...  Your escrow Co. should be able to then give seller(1) their $$ and seller(2)(you) the balance.  Two titles get recorded your done...  

Note. make sure the deeds are signed and dated otherwise the recorders office will refuse to record.  

Yes, you should be able to close the same day. We do it all the time with very few problems then again we have a good relationship with our Title rep who will help us when we get in a tight spot...  new lender rules might make it harder but does not affect recording just time consuming.  

Good Luck!