Income Tax Return Deduction Refund Concept
Tax concept with cubes and coins on light background
Financial data analyzing

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作者: Michael W. Brooks (税务律师/DIRECTS 董事长)

Angela Li (国际税务部经理)

美国政府终于在1月28号结束了长达5个星期的关闭。国税局恢复了正常工作. 但是这对于在2018年或以前在美国售房的外国投资者的大额预扣税申请退还意味着什么, 根据外国人投资美国房地产税收法(FIRPTA)外国售房者在房屋结束交易时上缴了房屋售价的15%预扣税到国税局？正常时间下，外国房地产投资者在当年售房时缴纳的15%预扣税，预计可能在第二年夏季可以收到预扣税退还 (基于投资者在擅长外国人房地产预扣税申请退还的专业税务公司例如DIRECTS的帮助下)。 但是在2018年底和2019年初，美国政府经历了5个星期的关闭，在此期间关闭的国税局依然收到了很多来自美国人和外国人的税务申请，信件以及其它各种请求。刚复工的国税局工作人员面对着很多堆积和积压的文件 (他们可能直接处理新的申请而不处理之前未打开信封的案子吗?) 此外，每年1月国税局内部会花很长时间来进行新员工(甚至是老员工)培训，因为每年税法比较上一年有变化，而国税局人员必须准备这些变化。因此即使政府关闭已经是过去式，很多税务专家预测2019年的政府关闭会导致退税时间发生严重的延误，在这种情况下，很多2018年或以前售房的外国投资者也期待着2019年收到他们的退税。这会对他们有影响吗？让我们一起探索。

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By. Michael W. Brooks, Esq.

The US government shutdown finally ended on January 28th– five weeks after it started. The full force of the IRS is back at work. What does this mean for the (in many cases) large refunds due to the non-US persons who sold US real estate in 2018 (and before), who were subject to a 15% IRS withholding tax (15% of the gross sales price must be sent into the IRS at the close of the sale…that’s the US tax law for non-US persons selling US real estate (known as “FIRPTA”))? In a normal period, a foreign investor who sold US real estate in one calendar year (where the 15% was sent into the IRS at the close of the transaction), could probably count on receiving their withholding tax refund around the summer or fall of the following calendar year (provided they were working with a tax professional who knew foreign real estate seller tax withholding system well- such as DIRECTS, Inc.). But in (late 2018 and) early 2019, the US experienced a five-week government shutdown, where a closed IRS still received thousands of forms, letters and overall correspondence from individuals from the US and not from the US. That’s a lot of piled and backed up correspondence IRS officials just back at work are going to have to sift through (are they even permitted to process tax refunds without first going thought the huge pile up in unopened mail?). In addition, each January apparently the IRS engages in a considerable amount of training of new employees (and even older ones), as each tax year brings with it changes that differ from prior years, and all IRS employees must prepare for the new changes. So even though the shutdown is already in the rear-view mirror, many tax experts are predicting significant delays to the IRS refund schedule caused by the mess the 2019 shutdown caused to the IRS in January 2019. While all this is going on at the IRS, we still have so many 2018 (and earlier) non-US sellers of US real who ae expecting big refunds in 2019. Will this IRS delay affect them? Let’s explore below.

The Shutdown’s Effect on The Withholding Tax Refunds Due to 2018 Foreign Sellers of US Real Estate

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我是一名中国公民，3年前出售了我在尓湾的房子但是一直没有拿回之前售房时被国税局根据美国房地产税收法(FIRPTA)所扣押的30万美金预扣税。现在我还有机会拿回这30万美金预扣税吗？当然可以!!

作者：Michael W. Brooks （税务律师／DIRECTS 董事长）

Angela Li (DIRECTS 国际税务部经理)

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By Michael W. Brooks, Esq.

President DIRECTS

At DIRECTS (Domestic and International Real Estate Closing Tax Services, Inc.), all day, every day, we work on tax matters relating to FIRPTA (the Foreign Investment in Real Property Tax Act). We work for clients from throughout the world who invest in real estate throughout the United States, but most of our clients own (or owned) real estate in California, and some of our clients are owed tax refunds from the IRS from real estate sales years which took place several years ago.

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By Michael W. Brooks, Esq. (President DIRECTS)

In January 2017, the IRS suspended the right of privately licensed tax professionals and companies (such as my firm- DIRECTS) to certify non-US passports, which slowed down significantly the time it took for a non-US person who sold US real estate to obtain an ITIN (an Individual Taxpayer ID Number)  in connection with their real estate sale, and therefore slowed down significantly the time it took for non-US persons to obtain a refund of the mandatory (up-front at the time of sale of US real estate) IRS withholding tax. By the end of 2017, the IRS had reinstated the right to private certifying acceptance agents to certify passports, but a lot of damage had already been done.

Recall the Basic Rules of FIRPTA, and What the Goal of the Foreign Seller is with Respect to FIRPTA- Get the Big Refund!

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作者：Michael W. Brooks 律师和 Angela Li

我们在第一篇博客中提到使外国房地产投资者避免向国税局缴纳增值税并在税法1031相同或类似资产交换(LIKE-KIND EXCHANGE)规定的时间内另外购置一栋相同价值的房屋的最好解决方案是进行国税局8288-B预扣税快速退还申请。办理程序需要在房屋结束交易前提交8288-B预扣税快速退还申请,同时产权过户公证公司在他们的信托帐户暂时托管这15%的预扣税大约4个月直到申请获得国税局的批准。回到我们以上的中国投资者准备进行1031相同或类似资产交换(LIKE-KIND EXCHANGE)的申请的例子，如果投资者在专业税务服务公司如DIRECTS的帮助下，在尔湾房屋交易结束前提交8288-B预扣税快速退还申请(同时也向国税局证明投资者准备进行1031相同或类似资产交换(LIKE-KIND EXCHANGE)的申请，因此出售尔湾房屋时不用缴纳任何税)，产权过户公证公司同意销售结束后在信托帐户托管预扣税几个月，中国投资者可以在税法1031相同或类似资产交换(LIKE-KIND EXCHANGE)要求的180天时间段内获得预扣税快速退税的批准，获得产权过户公证公司预扣税22万5千美金的退还并及时完成新港海滩房屋的购买。在产权过户公证公司的帮助下，中国投资者可以不用缴纳6万美金的增值税(同时也不用向国税局缴纳预扣税22万5千美金并要等到明年才可以申请退回)的情况下来及时购买一栋新港海滩房屋。

Michael W. Brooks 税务律师是国内, 国际房地产交易税务服务公司(DIRECTS)的董事长和创办人。DIRECTS是一家专门为外国房地产投资者提供各项税务服务的专业税务公司，包括协助产权过户公证公司办理外国投资者的预扣税快速退还申请及其它各项税务业务。DIRECTS目前在Arcadia, Irvine和Palm Desert都有办公室。公司电话：(626) 684-0428， 公司邮箱：info@directsllp.com 公司网址www.directsinternationaltax.com

 

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作者：Michael W. Brooks 律师 和 Angela Li

同美国公民一样，非美国公民和企业也同样适用于税法1031相同或类似资产交换(LIKE-KIND EXCHANGE)的条例。投资美国个人和商业房地产的外国投资者被允许延迟缴纳已经出售房产的增值部分的税，只需要投资者在出售房产后45天内选定一个新的“替代”房产并在出售房产后的180天内完成新房产的购买程序。例如：一位中国公民在Irvine(尔湾)购买了价值100万美金的房屋作为投资屋。3年后，尔湾房地产市场增值，有人出价150万美金要购买这位中国公民的房子。如果中国投资者直接出售房屋并没有做1031相同或类似资产交换(LIKE-KIND EXCHANGE)，投资者需要缴纳国税局大约6万美金的税(50万美金盈利减去大约10万美金房屋中介交易费等，剩下40万美金乘以15%的资本增值税率等于6万美金)。然而，如果我们的中国投资者在出售尔湾房产(“放弃房产”)后180天内在Newport Beach(新港海滩)购买另外一栋价值150万美金的房子(“替代房产”)，中国投资者可以通过进行税法1031相同或类似资产交换(LIKE-KIND EXCHANGE)立即避免向国税局缴纳6万美金的税。

但是外国投资者售房时15%(按照房屋售价计算)的外国人预扣税怎么办？产权过户公证公司必须上缴15%的预扣税因为中国投资者是外国公民？或者可以因为中国投资者准备进行1031相同或类似资产交换(LIKE-KIND EXCHANGE)而自动免除外国人投资美国房地产税收法(FIRPTA)的15%预扣税的规定？答案是产权过户公证公司仍然必须上缴15%的预扣税，即使中国投资者准备进行1031相同或类似资产交换(LIKE-KIND EXCHANGE)。一般来讲产权过户公证公司必须在房屋结束交易后20天内上缴15%的预扣税到国税局。在我们以上的例子中，出售尔湾房产时，产权过户公证公司必须扣押150万美金售价的15%也就是22万5千美金，正常程序是把这22万5千美金在房屋结束交易后20天内上缴到国税局。同时，我们准备进行1031相同或类似资产交换(LIKE-KIND EXCHANGE)的中国投资者必须在尔湾房子结束交易后的180天内完成价值150万美金新港海滩房屋的购买，投资者当然需要22万5千美金来完成购买。可是22万5千美金已经被缴纳到了国税局，并需要等到明年才能申请退回而因此来不及用于新港海滩房屋购买。所以中国投资者必须另外准备一笔22万5千美金用于购买新港海滩房屋，如果他有这笔多余现金的话。他也可以申请贷款。或者，也是最好的解决方案就是进行国税局8288-B预扣税快速退还申请，也是预扣税免进国税局的申请。

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By Michael W. Brooks, Esq.

As discussed in Part 1, we know Foreign Investors are permitted to enter IRC Section 1031 (like-kind exchange) transactions provided certain conditions are met.  The Foreign Investor can avoid (really delay) paying tax on the sale of the first property (the relinquished property), provided the Foreign Investor identifies a qualifying replacement property within 45 days of the sale and completes the purchase of the replacement property within 180 days of the sale.  But what about the 15% (of the gross sales price) non-US seller withholding tax?  Must the escrow company withhold 15% of the sales price because the seller is foreign (even though the foreign party is entering into a 1031 like-kind exchange)?  The answer is yes- 15% of the gross sales price must still generally be withheld at the time of closing, and not distributed to the Foreign Investor or to the 1031 Accommodator.  This is where 1031 transactions and the rules of FIRPTA (the Foreign Investment in Real Property Tax Act) intersect.  The Foreign Investor entering into a like-kind exchange transaction has a big problem with respect to this 15% withholding tax requirement under FIRPTA.  For IRC Section 1031 to work, the Foreign Investor must complete the purchase of the replacement property within six months, so he or she will need the 15% held by escrow back quickly, or he or she will blow the like-kind exchange and not be able to avoid the recognition of taxes on the sale relinquished property.

Consider the example below, where a Canadian couple needs their 15% back quickly, or they will owe tax on the sale of their first property.

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 By Michael W. Brooks, Esq.

As with US persons, non-US persons and parties (“Foreign Investors”) are allowed to enter into Internal Revenue Code Section 1031 (like-kind exchange) transactions. Foreign Investor exchanges allow owners of investment and business real estate to delay paying income tax on the appreciation of the property being sold (the “relinquished property”), provided the owner identifies a “replacement property” within 45 days of the sale of the relinquished property, and completes the purchase of the replacement property within 180 days of the sale of the relinquished property. This allows the person (even a Foreign Investor) to avoid paying the US (and California) tax on the sale of the relinquished property, but the investor will carry a lower basis from the relinquished property into the replacement property.

Take the example of a Chinese person who purchases an investment property (used as a rental property) in Irvine for $1,000,000. Three years after the purchase, the value of the Irvine property rises, and the Chinese person receives an offer to purchase the Irvine property for $1.5M. If the Chinese investor were to sell the property and not enter into a 1031 transaction, the investor might owe around $60,000 in tax to the IRS ($500,000 gain minus (say) $100,000 in realtor fees= $400,000 gain; $400,000 x 15% (federal capital gains tax rate)= $60,000 in tax owed to the IRS). The investor might also owe a tax to the State of California under this scenario, perhaps around $36,000 ($400,000 x 9% (average California tax rate)= $36,000). So in this case, our Chinese person will owe around $96,000 in total taxes on the sale if he does not take some action.   So what can he do to at least delay paying the $96,000 total tax on the sale? As long as he is willing to purchase another parcel of California real estate in the next 180 days the answer is simple- enter into a valid 1031 transaction. So to complete the example, let’s assume our Chinese person, within 45 days of the sale, identifies a Newport Beach property he wishes to buy (and again rent out) for $1.5M. Provided he completes the purchase of the Newport Beach property (the “replacement property”) within 180 days of the sale of the Irvine property (the “relinquished property”), our Chinese investor can delay paying any of the $96,000 in total tax pursuant to Internal Revenue Code Section 1031. In three years however, when our Chinese investor sells the Newport Beach property for $2M, he will owe probably $200,000 in total tax to the IRS and California (i.e., he must then pay the tax on the gain from the sale of both properties…but at least he was able to delay the tax on the sale of the Irvine property for three years because of Internal Revenue Code Section 1031).

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