A foreign person (non-U.S. citizen, non-resident alien) sells a California investment property for $500,000. The buyer does not intend to use the property as a personal residence. What is the applicable FIRPTA withholding rate?
Correct Answer
A) 15%, because the standard FIRPTA rate applies when the buyer does not qualify for the residence-use exception
The standard FIRPTA withholding rate is 15% of the gross sales price under IRC §1445. A reduced rate of 10% is available only when the sales price is $1,000,000 or less AND the buyer executes an affidavit stating they intend to use the property as a personal residence. Because the buyer in this scenario does not intend to use the property as a residence, the 10% exception does not apply, and the full 15% rate governs.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Transfer Of Property Question
Background Knowledge for Transfer Of Property
Real World Application in Transfer Of Property
Common Mistakes to Avoid on Transfer Of Property Questions
Related Topics & Key Terms
Key Terms:
More Transfer Of Property Questions
Determining who pays what at closing involves:
Closing is always the _____ step in real estate transactions.
Depreciation on rental property for federal tax purposes is calculated over:
A title company examines the public records and finds that all deeds in the property's history are properly recorded and connect in an unbroken sequence. This unbroken sequence of ownership is called the
In a jurisdiction where a later purchaser must both lack notice and record before the earlier claimant records, what kind of recording act applies?
- → A buyer records a deed at the county recorder's office. What is the primary purpose of recording?
- → A buyer drives past the property and sees someone other than the seller living there and maintaining the yard. This observation should put the buyer on what type of notice?
- → In a covered purchase transaction, the borrower receives a final form showing the loan terms, cash to close, and settlement charges shortly before consummation. What form is this?
- → Along with the signed offer, Quinn Brooks delivers a check to demonstrate serious intent to complete the transaction if the offer is accepted. What is this deposit called?
- → On a settlement statement, the buyer's earnest money reduces the remaining cash needed to close. How is that item characterized?
- → On a settlement statement, an item increases the buyer's amount due at closing. How is that item characterized?
- → On the seller's settlement statement, the purchase price of $400,000 appears as what?
- → At closing, the purchase price of $350,000 appears on the buyer's side of the settlement statement. Is this amount a debit or a credit to the buyer?
- → Under TRID rules, the lender must deliver the Closing Disclosure to the borrower at least how many business days before loan consummation?
- → In an escrow closing, the escrow agent discovers that the seller has not yet provided the signed deed. What should the escrow agent do?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Previous Question
A buyer is purchasing a home in San Diego for $650,000. The buyer is putting 20% down and obtaining a 30-year fixed mortgage at 6.5% annual interest. The lender requires the buyer to prepay the first month's interest at closing. What is the prepaid interest amount for one month?
Next Question
A California escrow officer is compiling the closing documents for a residential sale. Which of the following is NOT typically handled by the escrow holder during the closing process?