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Is A Property An Arms Length If Its Firpta?

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AppraizinAZ

Junior Member
Joined
Dec 31, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
I want to use a sale in an appraisal that under its special conditions in the listing it states N/A; FIRPTA may apply. Does this mean its a non arms length? I would think this would alert a potential buyer but the listing seemed to be arms length otherwise, actually a big high.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
It is an arm's length transaction.
FIRPTA is a tax on seller's who are foreigners. The buyer is responsible for the tax, now 15%.

Call the agent of that sale and ask how the FIRPTA was paid, did the closing company take the tax out of the proceeds?

Did the tax impact the sale price?

You need to know these things if you are going to use it as a comp.

I would also question the agent if the buyer's thought there might be additional risk involved due to the additional tax payments and record keeping.

.
 

Ken B

Elite Member
Joined
Feb 18, 2004
Professional Status
Certified General Appraiser
State
Florida
FIRPTA is a tax on seller's who are foreigners. The buyer is responsible for the tax, now 15%.

.

I don't think that is technically correct. The buyer must withhold the tax from the seller's proceeds, but is not directly responsible for the tax, per se. The only time the buyer would be responsible for the tax is if they failed to withhold it from the seller's proceeds.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
So the buyer withholds the tax and keeps it?

Doesn't seem like a tax then.

Without regard, as a tax, there is paperwork that the buyer is responsible for, should any IRS questions arise.

'Cause that's what the newest update to the law says. Buyer is responsible for the tax.

.
 
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