Closings can be stressful enough without last-minute complications—but when a real estate agent reached out to our firm for help, we were ready to step in and make a difference.
The agent was representing a Seller who was a non-U.S. resident, which meant the sale was subject to FIRPTA—the Foreign Investment in Real Property Tax Act. Under FIRPTA, the IRS requires a portion of the sale proceeds to be withheld at closing to ensure tax compliance. The law firm handling the closing insisted that a 15% withholding rate applied.
However, something didn’t add up. The agent contacted our office for a second opinion, and we got to work right away.
After reviewing the facts of the transaction, we identified an IRS regulation that applied in this situation and clearly allowed for a reduced FIRPTA withholding rate of 10%. We presented this information to the closing attorney at the other law firm, citing the relevant IRS guidance.
After careful consideration, the other law firm agreed that the proper withholding rate was in fact 10%, not 15%.
This wasn’t just a technical win—it had a dramatic impact on the Seller’s bottom line. Had the 15% rate been applied, the Seller would have been required to bring money to closing to cover the withholding. Instead, with the corrected 10% rate, the Seller received proceeds at closing.
The agent was extremely grateful for our help, and the Seller walked away from the table with a much better outcome than they had expected.
Once again, we lived up to our firm’s promise: “Everyone Walks Away Happy!”