ITIN Guidance for Foreign Property Buyers/Sellers

 If you are Non-US Person selling US Real Estate – you need ITIN

ITIN Guidance for Foreign Buyers/Sellers of U.S. Property Foreign sellers of U.S. real property interests need Taxpayer Identification Numbers (TINs) to request reduced tax withholding when disposing of the property interest, and to pay any required withholding. Individuals who do not qualify for Social Security Numbers (SSN) may obtain Individual Taxpayer Identification Numbers (ITINs) to meet the requirement to supply a TIN. FIRPTA (Foreign Investment in Real Property Tax Act)

TINs required for FIRPTA withholding (Forms 8288 and 8288-A)

  • Treasury Decision 9082 (effective November 4, 2003) requires all transferees (buyers) and foreign transferors (sellers) of U.S. real property interests to provide their TINs, names and addresses on withholding tax returns, applications for withholding certificates, notice of non-recognition, or elections under sections 897(i) when disposing of a U.S. real property interest.  The transferee withholds tax under section 1445 and remits it to the Internal Revenue Service on Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interest, and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests (FIRPTA). 

TINs required for requests for reduced withholding (Form 8288-B)

  • A transferor looking to reduce or eliminate the FIRPTA withholding amount must file a Form 8288-B, Application for Withholding Certificate for Disposition by Foreign Persons of U.S. Real Property Interests.   Since Form 8288-B requires a TIN, a transferor and/or transferee who does not qualify for an SSN may apply for an ITIN

Requesting an ITIN to meet FIRPTA TIN requirements

  • In order to obtain an ITIN number for FIRPTA purposes you must complete Form W-7 or W-7SP.  Select Box h (other)in the Reason you are submitting Form W-7 section of Form W-7, and Exception 4.  Write Exception in the write-in area to the right of Box h (other).

ITIN requests to claim reduced withholding (Form 8288-B)

  • The IRS will only issue ITINs based on applications that are complete and demonstrate a tax need for the numbers.  If the IRS rejects the ITIN application, the attached Form 8288-B will not be processed.  The IRS’ ITIN Unit will notify the applicant by mail that the Form W-7 was not processed and the FIRPTA Unit will also send Letter 3793 SC/CG to the transferee and foreign transferor with instructions to complete Form W-7 and reapply.  This letter will include instructions to resolve the issue outlined in the ITIN rejection letter.  When reapplying, the applicant must include a copy of Letter 3793 SC/CG with Form W-7 to be considered under Exception 4.  If the reason for rejection cannot be resolved, then the transferee must file Form 8288/8288-A and remit the 10% tax. (PATH Act increased withholding to 15%)

ITIN requests to pay withholding on Forms 8288 and 8288-A

  • If a transferee does not have a TIN, and an amount withheld under section 1445 is due to the IRS, complete Form 8288, 8288-A and mail the forms along with the payment to Internal Revenue Service by the 20th day from the date of the sale. 
In a separate package, mail a completed Form W-7 with supporting documentation and a photocopy of Form 8288 and 8288-A (do not send any payment) to Internal Revenue Service.
  • The Ogden Submission Processing Campus will not date stamp or mail out Form 8288-A, Copy B to the foreign transferor, if the transferors TIN is missing.  Instead, Ogden IRS will mail letter 3794 SC/CG to the transferor with instructions to apply for an ITIN.  Once the transferor receives the ITIN number they are to write it on the letter 3794 SC/CG and mail it back to the Ogden IRS office.  The Ogden IRS office will document the ITIN number on Form 8288-A Copy B, date stamp “Copy B mailed” on it, and mail it out to the transferor.

Claiming reduced withholding on a tax return

  • A foreign person who has an ITIN and is claiming credit for FIRPTA withholding shown on Form 8288-A must complete a federal tax return (1040-NR) using the ITIN assigned, and attach the date stamped Form 8288-A to the return as evidence of FIRPTA withholding.  • A foreign person who does not have a TIN (and as a result, will not have a date stamped Form 8288-A from the IRS) and wishes to claim a credit for FIRPTA must request an ITIN.  To request an ITIN the foreign person must send the following items to Internal Revenue Service
o a federal tax return (Form 1040-NR) for the year of the transfer; o an original Form W-7; o the required documentation listed in the Form W-7 instructions; and o a copy of the settlement statement from the sale that reflects the 15% withholding.