If the sales price is $300,000 or less and if the buyer intends to use the property for personal purposes as a residence for at least 50% of the time the property is in use for the next two 12-month periods following the transfer, the seller could be exempt from the withholding. The days the property is unoccupied are excluded in the 50% calculation. Vacant land is specifically not eligible for this treatment, even if the buyer intends to build a residence on the property. In order for the exception to apply, the buyer must be an individual, as opposed to a partnership, corporation, estate or trust. The buyer must be able, and willing, to sign an affidavit attesting to his intention to use the property personally for at least 50% of the time the property is in use. If the exception applies, the seller still must obtain a U.S. taxpayer identification number if he does not already have one and file a U.S. tax return to report the sale of the property.
For more information, check out shareholder Renea Glendinning's article FIRPTA Facts