FIRPTA Update

Here's some clarification on the recent FIRPTA changes.

Dear Members,

Here's an update on the changes in the FIRPTA withholding rate. The Treasury issued new regulations on February 17 to implement the changes made by the Protecting Americans from Tax Hikes Act in December 2015. The new regulations implement the increased withholding rate of 15% for transactions on or after February 17, 2016 and the reduced 10% withholding rate for purchase of a property for $1,000,000 or less to be used by the transferee as a residence. The new regulations do not clarify the meaning of "residence" for this purpose. However, the existing $300,000 exemption from withholding anything at all remains in effect.

However, the instructions for filling out the Form 8288 have been updated to clarify that the same factors that qualify a transaction of $300,000 or less to be exempt from withholding will be the same factors that qualify a transaction of $1,000,000 or less for the reduced withholding rate of 10%. So the definition of "used by the transferee as a residence" for purposes of the exemption if the sale is $300,000 or less should be used to determine whether the reduction of the withholding rate from 15% to 10% applies. In this context, "residence" means occupied by the buyer or a member of his family at least fifty percent of the time in which it is occupied for the first two years. It should also be noted that the buyer needs to be one or more individuals.

So here is your cheat sheet:

• If the amount realized (generally the sales price) is $300,000 or less, AND the property will be used by the buyer as a residence, the withholding rate is zero percent.
• If the amount realized exceeds $300,000 but does not exceed $1 million, AND the property will be used by the buyer as a residence, the withholding rate is 10% on the full amount realized.
• If the amount realized exceeds $1 million, then the withholding rate is 15% on the entire amount realized, regardless of use by the buyer.
• If the property will not be used by the buyer as a residence, then the withholding rate is 15% on the full amount realized.
• If the buyer is not an individual (one or more) then the rate is 15%.

DoubleTime 7.0.3 should be ready for release mid-March, unless we encounter issues with our pre-release group that need to be addressed. You will receive an email with a link when it is available for you to download.

As a reminder, if you're going to attend Fund Assembly this year, you have less than a week left to register for a discounted price. You don't want to miss out on this great educational opportunity, and I hope to see you all there this spring!

On a separate note, spring training for baseball is just around the corner and my #1 ranked Gators kicked off their 2016 season with a 3-game series sweep against Florida Gulf Coast!

As always, thank you for your support of The Fund.

Best Regards,

Melissa Jay Murphy
Senior Vice President and
General Counsel