FIRPTA Forward 1031 Exchange
Posted by Andy Gustafson on Thu, Jan 13, 2011
A title company I have known and facilitated 1031 exchanges for over the years in the Florida Panhandle called to introduce one of their clients. Karen's 1031 forward exchange was a bit unique in that she is a resident of New Zealand requiring additional Internal Revenue Service filings. The forward 1031 exchange accommodated a vacation rental property in the Florida Panhandle and acquired an investment property in Hawaii within the 180 calendar day requirement.
Foreign Investment in Real Property Act of 1980
Her CPA contacted me to assist in completing Form 8288. Every nonresident alien selling real estate must comply with the Foreign Investment in Real Property Tax Act (FIRPTA) requiring 10% of the selling price withheld and submitted to the IRS. We completed the form, submitted to the IRS in Philadelphia requesting a withholding certificate and was not required to submit the 10% which in Karen's transaction would have represented a sizable figure. Karen chose to work with two banking service providers splitting the funds between two escrow accounts, one requiring a personal identification number and a qualified escrow account requiring dual signatures to authorize the disbursement of exchange funds. When she purchased her replacement property in Hawaii, funds were wired a couple of days in advance of the closing and the 1031 exchange was completed.
Testimonial
"You did make it easy and clear ... you were the only one in the process that didn't create a drama, ha!"
Karen Sandler, Auckland, New Zealand