New FIRPTA Requirements in 2016

New FIRPTA Requirements in 2016

New FIRPTA Requirements in 2016

The withholding rate for  the new FIRPTA Requirements in 2016 has been increased to 15% of the amount realized (generally the sales price) on any sale that closes on or after February 17, 2016.  Withholding of 15% is required on all sales transactions, unless one of the following circumstances applies.


1)      Seller executes a “Certification of Non-Foreign Status (Ind, Corp, LLC, Trust, Estate)”. —  Exempt from FIRPTA withholding

2)      or Buyer acquires the property for use as a residence (*) and the amount realized is not more than $300,000.  —  Exempt from FIRPTA withholding

3)      or Buyer acquires the property for use as a residence (*)  and the amount realized is more than $300,000, but not more than $1,000,000.   —  FIRPTA withholding percent is reduced to 10%

4)      or Buyer acquires the property for use as a residence (*)  and the amount realized is more than $1,000,000.   —  FIRPTA withholding percent is 15%.

(*)  To qualify as a residence,  the buyer or a member of buyer’s family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant.

If the seller elects to apply for a Withholding Certificate to reduce or eliminate the required withholding amount and the final determination from IRS has not been received , FIRPTA Withholding is required based on the above criteria.


For more information, you can visit the IRS site.  Also, we strongly recommend that you speak with your lawyer or financial planner.

About the Author

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Gary Drew

An extensive and successful career in 1’s and zeros has served Gary Drew very well in the alternative universe of Real Estate. His previous senior level engineering and management experience has been an invaluable asset to his clients when negotiating pricing, leveraging comparable analytics, and playing to win on behalf of buyers and sellers fortunate enough to be represented by this dynamic and confi dent professional. Gary was born in the San Francisco. He grew up in Woodside, California and was a good student who also played football, basketball and baseball. “I played against Barry Bonds and like to think that helped his career” laughs Gary. He carried that competitive enthusiasm to play hard and win to both his past engineering sales role and to his current Real Estate career. He loves to visit St. Thomas in the Virgin Islands and fi sh on the Kenai River in Alaska while growing up. These are places he returns to often as an adult, “to recharge my batteries”. But the competitive spirit is never completely abandoned, and he holds the certifi cates for catching a trophy Silver Salmon (21.5 LBS) and a King Salmon (73 LBS). Gary attended DeVry University and graduated with an engineering degree in 1984. He moved back to California and started his fi rst career in Silicon Valley. He became a very successful executive, working for several engineering fi rms including Bytex, Cayman Systems, DQ Technology and others. Gary served as a Field Engineer and Sales Manager building businesses for companies in the US, Asia, Europe and South America. “It was an exciting time in my life” says Gary. “It was a great time to be in the tech fi eld.” A job transfer to Phoenix in 2001 included a marriage, a home, kids, and a desire for a career with less travel and more home-time. Family infl uence is powerful, and in 2004, Gary was introduced to the Real Estate profession by his Mother, a successful Realtor in the valley. He became licensed and subsequently became the Designated Broker of one of the top Real Estate companies in Anthem AZ. Connecting the dots between high tech and real estate, it’s easy to see how Gary’s analytical background, his experience and passion for negotiation and contracts plus love of numbers converge to create a powerful ally when representing a buyer or a seller. Add to that, years of people management experience and an overriding desire to win now you’ve got the reason why Gary Drew lands in the top 3% of his profession year after year. Today, Gary is an Associate Broker and Sales Manager for a Berkshire Hathaway HomeServices in Anthem AZ. He is a single Father raising a teenage daughter and to those who have experienced that he says "hanging on to my ego for dear life.” He still enjoys traveling, sports and plays golf whenever work and home allow.” I’m so lucky to be doing what I love. Life is good.”

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