|
Date: 2005-09-20 11:53:45
8-26-2005 SALES OF U.S. REAL ESTATE BY FOREIGN DIPLOMATS RESIDING IN U.S. ON DIPLOMATIC VISAS ARE SUBJECT TO 10% FIRPTA WITHHOLDING
August 26, 2005
Thomas C. Roberge & Company
St. Petersburg and Sarasota
Telephone: (727) 822-9393
Contact: TaxInfo@RobergeCo.com
Copyright, 2005, Thomas C. Roberge & Company
All Rights Reserved
Each
year we receive several phone calls from distressed closing agents who
are dealing with the sale of U.S. real estate by a foreign diplomat who
is residing in the U.S. on a diplomatic visa.
There
are many non-U.S. citizens who work for their foreign governments in
the U.S. on what is commonly referred to as a "diplomatic visa".
These visas allow the diplomat and their families to reside in the U.S.
while they are here on a tour of duty for their home country. The
primary tax advantage of the visa is that their compensation while
working here is exempt from U.S. income tax.
Many
diplomats feel that this visa exempts all their U.S. source income,
including sales of U.S. real estate, from U.S. income tax. This
is false. The diplomatic visa only exempts their salary while
working here from federal income tax. They are a
nonresident alien for all other tax purposes. Thus, the sale of
their U.S. real estate is subject to the normal 10% FIRPTA withholding
rules.
On occasion, some of these diplomats have an
inflated opinion on the scope of the tax exemption afforded by their
diplomatic visa and think that their real estate sales are also exempt
from U.S. income taxes. Contact us if you get caught in this
situation and we can work with you and your client in resolving the
matter.
Internal Revenue Service Circular 230 Disclosure
- You are hereby advised that any tax advice contained in this
newsletter is not written or intended to be used (and cannot be used)
by any taxpayer for the purpose of avoiding penalties that may be
imposed under the Internal Revenue Code or to support the marketing of
any tax transactions or matters addressed herein.
|
