Fulfilling your legal obligations is very important. This is one of the reasons why you need to fill the FIRPTA affidavit. Fortunately, there are some companies that will guide you through the whole process to ensure that you do not make any mistakes. That said, you need to be familiar with instances when a FIRPTA affidavit is required. Understanding when a FIRPTA affidavit is required is important for those who are considering dealing in real estate property. It enables you to fulfill all your legal obligations. FIRPTA affidavit is important when it comes to the payment of taxes when dealing in the real estate industry. In the previous years, there was no need for those dealing with real estate to pay taxes.
However, that changed since 1980 and the payment of real estate taxes became a requirement. The laws required foreigners dealing with real estate in the US to pay at least 15 per cent withholding taxes of the total sale price of the property that they are intending to dispose. In essence, this form is required for resident sellers. The resident sellers will usually declare that they are residents of the US and are not obligated to pay the withholding taxes. However, when the seller of the property is a foreigner, they will be required to pay the taxes and hence there is no need to do the FIRPTA affidavit. If you are a local, you do not have to worry about the form 8288.
The essence of the affidavit is to certify that the person selling the property is a local resident and is not required in law to withhold taxes. This form goes a long way in helping a seller to avoid paying withholding taxes. However, you have to see to it that the seller of the property is not a foreigner. However, there are instances when foreigners qualify for exceptions when it comes to FIRPTA. One of the main exceptions relates to the purchase price of the property.
If the value of the property is less than three hundred thousand dollars, then the owners are entitled to exceptions. However, whenever the price is beyond that amount, they will be required in law to pay the withholding taxes. You need to look for competent professionals who will help you do the FIRPTA affidavit. In most instances, the processing time does not have to exceed twenty days. This will usually be done with the guidance of an IRS representative.
Check out this post that has expounded on the topic: https://en.wikipedia.org/wiki/Tax.