When a foreign person sells U.S. real estate, 15% of the sale price will withheld. However, U.S. formed entities like limited liability companies are not themselves considered to be a foreign person so withholding would not apply (although their members may be responsible for payment of any amounts due). In the alternative the foreign person can obtain a FIRPTA withholding certificate (IRS form 8288-B), which will minimize the amount of the sale price that is withheld. To obtain the form, application must be made to the IRS. If accepted by the IRS, then escrow will not withhold the standard 15%. But Form 8288-B must be applied for months in advance of close of escrow to arrive in time. Even if not received in time, the Withholding Certificate may speed up the time to obtain a refund. Contact your accounting professional for the details on FIRPTA and its requirements.
