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If you are disposing of real property situated in the U.S., you are subject to a non-resident withholding tax of 10% of the gross sales price.
You may eliminate your non-resident tax withholding at source by advising your tenant that you have elected to file a U.S. tax return and by providing them with Form W-8ECI. You will need a U.S. tax identification number in order to make this election.
You must file a U.S. tax return if you have not had non-resident tax withheld. If you do not file the tax return within the specified time period, the IRS will disallow all deductible expenses as well as any related loss carryovers. In addition, the I.R.S. will assess penalties for late filing and underpayment of tax.
* This information is general in nature and does not constitute professional advice. We recommend that you obtain the appropriate accounting, legal or other professional advice before acting on any of the information contained herein.