Is A Property An Arms Length If Its Firpta?

[AppraizinAZ]

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]

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.

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[Howard Klahr]

Does this mean its a non arms length?

Are the buyer and Seller related? Therein lies your answer.

 

[Ken B]

FIRPTA is a tax on seller's who are foreigners. The buyer is responsible for the tax, now 15%.

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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]

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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[Meandering]

https://appraisersforum.com/forums/...le-for-withholding-or-paying-this-tax.215647/