Form 8288. The tax withheld on the acquisition of a U.S. real property interest from a foreign person is reported and paid using Form 8288. Form 8288 also serves as the transmittal form for copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests.

Are Canadians exempt from FIRPTA?

Canadians who own property in the U.S. are not required to file U.S. tax returns unless the property generates rental income or they have other U.S.-sourced income in a given tax year. The FIRPTA withholding is not a tax but a withholding against capital gains tax.

Who is required to collect and remit 15 of the gross sales price at closing to the IRS?

For U.S. property dispositions subject to FIRPTA, the transferee (purchaser) is required to withhold and remit to the IRS 15% of the gross sales price to ensure that any taxable gain realized by the seller is actually paid.

What do you need to know about form 8288-a?

About Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests. Buyers and transferees use this form with Form 8288 for each foreign person that disposes of real property located in the U. S. to report withholding on the amount realized.

How to apply for an OMB Form 8288-B?

Form 8288-B (Rev. February 2016) Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests Please type or print. OMB No. 1545-1060 1 Name of transferor (attach additional sheets if more than one transferor) Identification number Street address, apt. or suite no., or rural route.

When to file Form 8288-B for closing date?

If the tax owed to on the gain is less than the amount withheld you may file Form 8288-B in advance of the closing date to have the withholding taxes reduced to the actual taxes owing.

When to consider FIRPTA when selling real estate in Canada?

When FIRPTA’s withholding rules apply to a real estate transaction, all the parties must be made aware. It is prudent for the Canadian seller to consider the pros and cons of the various methods of complying with FIRPTA in order to have a clear path ahead, especially when the cooperation of the buyer and the escrow agent is often required.