A non-U.S. resident is selling a California investment property for $900,000. The buyer does not intend to use the property as a personal residence. Under FIRPTA, what is the federal withholding amount the buyer must remit to the IRS?
Correct Answer
C) $135,000
Under FIRPTA (26 U.S.C. § 1445), when a foreign person sells U.S. real property and the buyer does not intend to use the property as a personal residence, the standard withholding rate is 15% of the gross sales price. $900,000 × 15% = $135,000. The buyer must withhold this amount and remit it to the IRS within 20 days of closing.
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Related Concepts
Intestate succession is the legal process by which a deceased person's property is distributed according to state law when they die without a valid will. State statutes determine the order of inheritance.
Marketable title is title that is free from reasonable doubt as to who the owner is and free from liens, encumbrances, or defects that would cause a reasonable buyer to hesitate before purchasing. It is also known as merchantable title.
Probate is the legal process by which a deceased person's will is validated by the court and their estate is administered, including the transfer of real property to the named beneficiaries or heirs.
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