Are you a foreigner investing in luxury homes in Alexandria ?

If you are, a foreigner investing in luxury homes in Alexandria always consult with an accountant to know the implications. Though there are no restrictions there’s always some issues that you would have to deal with. A foreigner can invest in the US, but there are implications especially when selling a luxury home.

For instance, if you buy a luxury home in Alexandria it will not become apparent when writing a contract as the regional forms do not include the foreign investment taxes or FIRPTA disclosure that MD refers to.

Following is an excerpt from the GCAAR form #1312 Addendum explaining the withholding.

Section 6 of the MC Jurisdictional Addendum: ” Foreign Investment Taxes – FIRPTA: Section 1445 of the United States Internal Revenue Code of 1986 provides that a Buyer of a residential real property located in the United States must withhold federal income taxes from the payment of the purchase price if (a) the purchase price exceed Three Hundred Thousand Dollars ($300,000) or the purchase price is less than or equal to the Three Hundred Thousand Dollars ($300,000) and the property will not be owner-occupied, and (b) Seller is a foreign person for purpose of the U.S. Income Taxation. A foreign person includes but is not limited to, a non-resident alien, a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined by the Internal Revenue Code and applicable regulations). In the event the Seller is a foreign person (as described above), the Seller will be subject to the withholding provisions of FIRPTA. If the seller is not a foreign person, the Seller agrees to execute an affidavit to this effect at the time of Settlement.”

This means a part of the proceeds from the sell will be withheld by the title company.

We are lucky to have many visitors in our region and lots of them fall in love with DC or VA to later making them their permanent resident but in many instances buying a property because they see the potential and the great investment opportunity.

Regulations always change so remember to consult with your financial adviser and/or accountant or your local real estate agent.

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Patricia S Harris
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