When selling a US property as a non resident alien (NRA), you are required to have an ITIN (US tax number) as the transaction is reported for tax purposes to the IRS.
ITINs are issued to non residents of the US or those not eligible for a Social Security Number (SSN).
If you do not have an ITIN at closing or close to closing, you have various options.
The primary and standard method is:
- to apply for an ITIN with the closing paperwork AND the FIRPTA tax paperwork on the property being sold, This is applied for at or close to closing of the US real property sale.
Can I get an ITIN before closing on a US property sale?
In some cases yes. It depends if you are filing a US tax return for the first time or if you have a US mortgage, other US income or a US business. In all cases, sufficient paperwork has to be attached to the application.
Please note, as of November 2022, the IRS is still 4 months behind. If you already have a sale in progress, it may be best to just attach the sale paperwork (as above) and apply for the number at closing. This would be the quicker way of obtaining the number, as US property sales are prioritised by the IRS.
My agents say I need a number before I close. What now?
Some US agents do not deal with non residents on a regular basis and are therefore unfamiliar with the rules. As long as the closing paperwork is attached AND the FIRPTA paperwork (8288 and 8288-A or 8288-B) is also attached, you are good to go ahead and close.
The 8288-A requires the 15% tax to be paid within 20 days of closing.
The 8288-B requires the 15% held in escrow until the IRS decides if any reduced withholding application is approved or denied. Currently, due to IRS delays, this decision may take 9 months or more. It may just be easier to hold 15% (on the 8288-A) and then file a tax return the year after sale. This is particularly helpful if you are close to the end of the US tax year.
I already have an ITIN but I have been advised it is expired now. What do I do?
If filing FIRPTA paperwork for the closing, you should also renew the number at the same time at or close to closing. This will stop delays in applying for your refund of US tax paid, when you do file a 1040NR to report the sale and claim back any overpaid US tax.
How can Just Breve assist?
Just Breve is a certifying acceptance agent for the IRS. We have a contract with them to assist with any and all ITIN application types. We deal with US property sales on a regular basis. If you require assistance with your Form W-7 ITIN application or have a rejected ITIN application from a prior attempt, we are more than happy to assist you:
T: 0208 1444632
Just Breve is located near London Heathrow and the M4 and M25 corridors. The Elizabeth Line is also close by with a short 10 minute bus journey that stops in front of the office.
We also offer video based certifications for those at a distance or out of country. This option requires you to mail in your identity documents which are returned after the video call.
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