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STRATEGIC TAX SERVICES

News

September 15, 2016

Reporting and Paying Tax on U.S. Real Property Interests

 

Two forms are generally used for reporting and paying the tax to the IRS regarding the acquisition of U.S. real property interests.

  • Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests
  • Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests

Transferees must use Forms 8288 and 8288-A to report and pay to the IRS any tax withheld on the acquisition of U.S. real property interests. These forms must also be used by corporations, partnerships, estates, and trusts that must withhold tax on distributions and other transactions involving U.S. real property interests. You must include the U.S. TIN of both the transferor and transferee on the forms (refer to the "Requirement for Taxpayer Identification Numbers (TIN's)" section below).

For partnerships disposing of U.S. real property interests, the manner of reporting and paying over the tax withheld is the same as discussed under Reporting and Paying Tax on Partnership Withholding.

For publicly traded trusts and real estate investment trusts, you must use Forms 1042 and 1042-S procedures for reporting and paying over tax withheld on distributions from dispositions of U.S. real property interests. Use Income Codes 24, 25, and 26 on Form 1042-S for transactions involving these entities.

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