FIRPTA is administered by IRS, Ogden which cannot be contacted by telephone or email for advice. IRS Philadelphia is totally unhelpful. The affadavit avoiding FIRPTA retention requires the buyer to certify they will use the condo for 50% of the time. Why this has any bearing is unclear. I have complained to the Treasury Inspector General for Tax Administration, (TIGTA), who can at least be contacted by email. This whole situation is a disgrace and is a major deterrent to non-US buyers of real estate.
The issue is not going to be resolvable via the broker, this is an IRS matter.
Although a good agent with international clientele might have offered the advice you sought, I doubt they can be held accountable for not doing so. I understand your frustration but Realtors are not CPAs and cannot offer tax advice. Your CPA is the one who should have advised you on tax matters relating to your overseas investment and nobody else. And all buyers who are investing overseas should be hiring a local tax advisor as there are obvious issues that will come into play in any international transaction.
In short the agent could have done a better job, but not hiring an international CPA was the big mistake here... and unfortunately that mistake was yours. And it would seem you're going the cheap route again by trying to fix the problem on Trulia for free. If you want to get out of this fix - get the advice of a CPA!
This information may help you, it is directly from the IRS website-
Generally you do not have to withhold in the following situations; however, notification requirements must be met:
You (the transferee) acquire the property for use as a home and the amount realized (generally sales price) is not more than $300,000. You or a member of your family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant.
The property disposed of (other than certain dispositions of nonpublicly traded interests) is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. However, if the class of stock had been held by a foreign person who beneficially owned more than 5% of the fair market value of that class at any time during the previous 5-year period, then that interest is a U.S. real property interest if the corporation qualifies as a United States Real Property Holding Corporation (USRPHC), and you must withhold on any disposition.
The disposition is of an interest in a domestic corporation and that corporation furnishes you a certification stating, under penalties of perjury, that the interest is not a U.S. real property interest. Generally, the corporation can make this certification only if the corporation was not a USRPHC during the previous 5 years (or, if shorter, the period the interest was held by its present owner), or as of the date of disposition, the interest in the corporation is not a U.S. real property interest by reason of section 897(c)(1)(B) of the Internal Revenue Code. The certification must be dated not more than 30 days before the date of transfer.
The transferor gives you a certification stating, under penalties of perjury, that the transferor is not a foreign person and containing the transferor's name, U.S. taxpayer identification number, and home address (or office address, in the case of an entity).
You receive a withholding certificate from the Internal Revenue Service that excuses withholding. Refer to Withholding Certificates.
The transferor gives you written notice that no recognition of any gain or loss on the transfer is required because of a nonrecognition provision in the Internal Revenue Code or a provision in a U.S. tax treaty. You must file a copy of the notice by the 20th day after the date of transfer with the:
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409.
The amount the transferor realizes on the transfer of a U.S. real property interest is zero.
The property is acquired by the United States, a U.S. state or possession, a political subdivision thereof, or the District of Columbia.
The grantor realizes an amount on the grant or lapse of an option to acquire a U.S. real property interest. However, you must withhold on the sale, exchange, or exercise of that option.
The disposition (other than certain dispositions of nonpublicly traded interests) is of publicly traded partnerships or trusts. However, if an interest in a publicly traded partnership or trust was owned by a foreign person with a greater than 5% interest at any time during the previous 5-year period, then that interest is a U.S. real property interest if the partnership or trust would otherwise qualify as a USRPHC if it were a corporation, and you must withhold on it.
The certifications in items (3) and (4) are not effective if you have actual knowledge, or receive a notice from an agent, that they are false. If you are required by regulations to furnish a copy of the certification to the IRS and you fail to do so in the time and manner prescribed, the certifications are not effective.
407 832 4888
From my perspectie I put myself in the hands of what I believed was a professional realtor not 'a house valuer' and I feel that the issue should have been raised prior to the contract being sent to my and being advised to sign it.
Also you can file a tax return and possibly get that money back from the IRS... by the way.
Go to http://www.IRS.gov if you want to try to figure it out for yourself or hire a Certified Public Accountant.
To cancel your contract you need an attorney's advice. Be very careful where you get your advice--Realtors are not qualified; in Florida we're required to only have a High School Education and be 18 years old to "practice" as a Realtor! Many have education beyond that but it's funny because statistics have shown that the higher level of education of a Realtor, the lower their income!
I feel horrible for the situation that you are finding yourself in and I second Marcus' advice to consult with a CPA and add my recommendation to speak with a Real Estate Lawyer as soon as possible.
There are steps that can be taken prior to closing to reduce the amount of withholding, but they do take a bit of time.
Iif you do not have enough time left in the contract to work this out... have your agent communicate with your buyers to see if they will allow an extension to do so. It is inescapable that many deals fall-through due to issues discovered after the contract is signed, I'm sure they'd prefer to wait a bit for you to get your end sorted than to have you cancel the deal and them having to begin the shopping process all over again. If you are not feeling confident in your agent's ability, please speak with their Broker.
Century 21 Professional Group, Inc.
This is direct from the IRS website.
Liability of Agents
If you receive either of the certifications discussed in item (3) or (4) and the transferor's agent or your agent (the transferee's agent) has actual knowledge that the certification is false, or in the case of (3), that the corporation is a foreign corporation, the agent must notify you, or the agent will be held liable for the tax. The agent's liability is limited to the amount of pay the agent gets from the transaction.
An agent is any person who represents the transferor or transferee in any negotiation with another person (or another person's agent) relating to the transaction, or in settling the transaction. A person is not treated as an agent if the person only performs one or more of the following acts related to the transaction:
Receipt and disbursement of any part of the consideration,
Recording of any document,
Typing, copying, and other clerical tasks,
Obtaining title Insurance reports and reports concerning the condition of the property, or
Transmitting documents between the parties.
A Withholding Agent is personally liable for the full amount of FIRPTA withholding tax required to be withheld, plus penalties and interest. A Withholding Agent is any person having the control, receipt, custody, disposal or payment of income that is subject to withholding. Generally, the person who pays an amount to the foreign person subject to withholding must do FIRPTA withholding.
I wish you the best of luck with this and if I can be of any assistance, send me an email. Regards, Danny
Secong hire an attorney regarding this issue.