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Some NEED to knows regarding US Real Estate

Posted by Ron Neal on Tuesday, January 22nd, 2013 at 6:08pm.

A few things you need to know when Buying or Selling US Real Estate

FIRPTA FOR SELLERS: As a Canadian selling your home, the US Government takes 10% withholding tax on any home/condo that a foreigner sells... How do I prevent 10% withholding tax?

  • File a 8288 form found at irs.gov
  • Ask yourself these 3 questions: If yes to all 3 questions -- the Canadian seller MAY be exempt from paying the US Government 10% withholding tax
    • Is the condo/home I am selling under $300,000 US?
    • Is my condo/home a residential property?
    • Is the buyer of my condo/home going to occupy as a primary/secondary owner? (so, if the buyer is going to turn the home/condo into a rental -- you now just lost your exemption)

FIRPTA AS A BUYER: If you are a Canadian Buyer, make sure that if you are buying a property in Arizona that the seller is not a foreigner or you may be subject to 10% withholding unless you are buying as a primary or secondary home. How do I avoid huge taxes in USA?
REMAIN a CANADIAN RESIDENT (non-resident alien status in the USA). How do I know if I am truly a non-resident alien?

  • Know the formula for the SUBSTANTIAL PRESENCE TEST
  • 183 DAYS is the key number of days in 3 years
    • In 2012 how many days were you in the USA? (100 days)
    • In 2011 how many days were you in the USA (take 1/3 off all days present)? (90 days Divided by 3 = 30 Days)
    • In 2012 how many days were you in the USA (take 1/6 off all days present)? (60 days Divided by 6 = 10 Days)
    • TOTAL days in 3 years = 140 days (which is under 183 days, meaning you are not taxed as a US CITIZEN. YAY!)

If you have additional questions or would like to be introduced to an expert in any area worldwide of interest you please let me know.

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The Neal Estate Team

The Neal Estate Team is your #1 source for all of your Victoria BC real estate needs. Get in touch with us online or by phone at (250) 386-8181 to speak with a Victoria real estate buying or selling expert today. With decades of experience as a top selling Victoria REALTOR® and ranked in top 1% globally with over 4,000 transactions and $1 Billion SOLD, Ron Neal & The Neal Estate Team have the industry experience and market knowledge to help you make smart and informed buying or selling decisions. 


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