We sold our property, now how do we get the 10% back from the IRS?
You already know the bad news: When a non-US citizen sells a US property, the IRS automatically withholds 10% of the sale price. This is their estimate of tax you may owe, plus a bit extra to be sure.
Here is the good news: You'll be happy to know that it is possible to get most of this back. The actual tax due is based on your profit in the sale, and if there was no profit, then there is no tax, and the IRS will return the money.
But there is a problem. Trying to do this yourself, from overseas, is simply not going to work.
What you'll need is a US-based accountant who understands these transactions, who understands and can decypher the Byzantine IRS tax code, who can interpret the income and expense statements knowing what can be deducted and what cannot, can figure the tax that is really due (if any), and then file the correct forms to get you the refund.
Your refund check, incidentally, will be in US Dollars, which we can convert to your currency and then wire the funds to you.
Question 1: How long does it take?
Answer: The IRS only moves quickly when it wants money, not when it pays money. If this is a simple transaction and you already have an ITIN number, it will take a few months. If this involves rental property and you do not have your ITIN, expect it to take longer. Once it finally arrives here, you will have it within a week.
Question 2: How much can I get?
Answer: This depends on the individual situation. Sight unseen, the only answer can be "somewhere between none of it and all of it". The actual refund is usually closer to "all of it" than to "none of it". We will not charge you if a preliminary examination of the records indicates that there will be a minimal or no refund. Your risk is limited to some time and postage, but your reward may be considerable.
Question 3: OK, what does it cost?
Answer: The accountant's fee is based on the time required, not on the amount returned.
Least expensive: You have your ITIN, the property was never rented out (had no income), title was held in one name only. The fee is $750. If title was held jointly, add $250 per person. There is a "per person" discount because some of the information is the same on the other returns, so it does not require twice the work for two people.
If the property was rented out (had income), then the IRS requires a separate return for each owner (even if they are married!), which means the accounting fee will be $750 per owner.
More complex returns cost more. If you do not have an ITIN, we will need to get one for you, and there is a small fee for that.
Question: Do you guarantee I will get a refund?
Answer: No, and no one ethical can or will do that. We will make our best efforts to maximise the amount you do get, but this amount cannot be predicted or guaranteed without examining the accounts.
Question: What do I need to send you to get started?
Answer: Send an e-mail with a general outline of the situation. Advise if you have or will need to get an ITIN (or more than one). Start collecting receipts for expenses and any income statements. We will need the closing statement from the title company for when you bought the home, and we will also need the closing statement from the title company when you sold it. If you have any IRS withholding forms sent you by the management company (usually IRS form #1042-S) or the title company or closing agent (usually IRS form #8288), we will need those as well. We will need bills and receipts for property taxes, utilities (telephone, cable, water, electricity), homeowners' associations, repairs, management fees, and the cost of trips to inspect the property. (There will be more - and you can see why it is inadvisable to try to do this unaided.)
Question: How do we push the paper?
Answer: Don't spend the money for courier services. The postal service delivers almost as quickly for a lot less money, and remember the IRS isn't in a hurry anyway. Send clear photocopies to our post office box as below:
Integrity Financial, LLC
PO Box 785
Ormond Beach, FL 32174 USA
If you use a courier service (Fedex or DHL), you must send to the street address since couriers can't deliver to post office boxes.
Integrity Financial, LLC
740 S. Ridgewood Ave.
Ormond Beach, FL 32174 USA
Alternatively, our fax number is + 1 386 673 6560. Be aware that the fax machine expects US sized pages, which are 8.5 inches wide by 11 inches long. A4 or A6 size paper will give the machine indigestion, and all the data may not come through. (A4 pages are a bit longer than 11 inches.)
Finally, the phone here is + 1 386 672 0200. It is answered between 9 AM and about 11:30 AM, and from 1 PM to 5 PM EST, weekdays. The time here is GMT minus 5 hours.
Once the funds arrive, Integrity Financial will convert them to the currency of your choice and wire them to any bank account you specify for the standard fee of one percent.
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5/9/06