International Real Estate Ownership2021-01-30T14:00:25-07:00

International Real Estate Ownership

CS CPA Group handles hundreds of complex cross-border real estate transactions every year.  We specialize in helping Canadian citizens navigate the complex rules around International Tax Treaties, FIRPTA tax withholding, Individual Tax Identification Numbers and filing 1040 Non-Resident returns.

FIRPTA Withholding

One of the most surprising and unexpected parts of selling real estate as a foreign national might be FIRPTA (Foreign Investment in Real Property Tax Act) withholding. A Canadian resident selling real estate located in the United States is subject to a 10% or 15% withholding of the gross selling price. If the property is sold for less than $300,000 and the buyer intends to use it for their primary residence, then you are exempt from withholding. CS CPA Group can determine if your transaction is subject to FIRPTA withholding and work with real estate agents and title companies to educate them on this complex regulation.

With holding Certificate

A withholding certificate can be applied for to release some of the FIRPTA taxes back to you.  This application needs to be filed with the IRS prior to the sale of the property.  The Title company must also be willing to hold onto the funds until the IRS makes their determination.  This is a complex process that can take up to 6 months to process.  As such, we will only make the application for sales that take place during the first half of the year.

ITINs

The next step in the process is the W-7 application for an Individual Tax Identification Number (ITIN), and is needed to file a tax return.  The IRS has very specific rules about when an ITIN can be applied for and why.  If the sale is subject to FIRPTA withholding, an ITIN can be applied for at the time of closing.  Otherwise, the process will be completed with the tax filing.  We are IRS Certified Acceptance Agents who review and certify your documents that accompany the application.

Federal and Arizona Tax Filings

The final step in the process is the filing of the Federal 1040NR and Arizona 140-NR tax returns.  These returns calculate any gain on the property, then determine how much of it is taxable.  A return must be filed, even if there is no gain.  We take great care to ensure that we include every possible deduction to minimize your taxable gain.  Tax filings are done on an individual basis, so if ownership includes a husband and wife or multiple owners, a tax return must be filed for each foreign individual on the title.

Pricing

Our pricing is straight forward:

  • Form W-7 (ITIN) Filing only – $250 per person
  • Form 1040NR Filing only – $300 per person
  • Form 1040NR with Form W-7 (ITIN) – $500 per person
  • Form 1040NR with Form W-7 (ITN) and Withholding Certificate – $1000 per person

News from CS CPA Group

2021 Tax Changes

If you haven't started already, it's time to begin thinking about your 2021 tax return. After all, the more

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