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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