Foreign Buyers – FIRPTA

Take good care of your foreign buyers. As real-estate agents, we have a fiduciary responsibility to inform our international clientele of the US tax implications when buying or selling real estate here in Malibu.

Keep your clients informed about the FIRPTA (Foreign Investment in Real Property Taxes Act) rules, which require the buyer to withhold 10% of the gross proceeds when the property is sold.  If the property is rented out, the rental income will be subject to Federal income tax. The gross rent will be taxed at 30%, without any deductions. Also important not to forget the state tax position if the property is rented out or when it is sold.

Always recommend your clients to talk to their tax advisors before purchasing or selling.

By
John Snyder, Realtor at Prudential Malibu Realty 310-459-8163

Foreign buyers in Malibu

By John Snyder

Published:

Wednesday, August 29, 2012 10:29 AM PDT

This year, as many of my real estate colleagues are saying, “the light switch is back on” in Malibu. We are seeing that not all buyers are from the U.S. anymore. Most of the buyers today are from places like Asia, Canada, Europe and Latin America.

According to The Wall Street Journal and a survey by the National Association of Realtors, international buyers accounted for $82.5 billion, or 8.9%, of the $928 billion spent on residential real estate in the 12-month period that ended in March. That’s up 24% from $66.4 billion in the previous year period.

The survey showed that about 55% of all international buyers came from five countries: Canada, China, Mexico, India and the United Kingdom. Five states, meanwhile, accounted for around 55% of all sales to international buyers: Florida, California, Texas, Arizona and New York. The survey found that 62% of international buyers paid in cash.

In our experience this year, we have seen an influx of Russian and Chinese buyers purchasing lots of local land and distressed homes.

John Snyder is a Realtor at Prudential Malibu Realty, 310.459.8163