Reduced FIRPTA Withholding for Mid-Market Residences

§ 1445. Withholding of tax on dispositions of United States real property interests(a) General ruleExcept as otherwise provided in this section, in the case of any disposition of a United States real property interest (as defined in section 897(c)) by a foreign person, the transferee shall be required to deduct and withhold a tax equal to 15 percent of the amount realized on the disposition. (b) Exemptions(1) In generalNo person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition if paragraph (2), (3), (4), (5), or (6) applies to the transaction. (2) Transferor furnishes nonforeign affidavitExcept as provided in paragraph (7), this paragraph applies to the disposition if the transferor furnishes to the transferee an affidavit by the transferor stating, under penalty of perjury, the transferor’s United States taxpayer identification number and that the transferor is not a foreign person. (3) Nonpublicly traded domestic corporation furnishes affidavit that interests in corporation not United States real property interestsExcept as provided in paragraph (7), this paragraph applies in the case of a disposition of any interest in any domestic corporation if the domestic corporation furnishes to the transferee an affidavit by the domestic corporation stating, under penalty of perjury, that—(A) the domestic corporation is not and has not been a United States real property holding corporation (as defined in section 897(c)(2)) during the applicable period specified in section 897(c)(1)(A)(ii), or (B) as of the date of the disposition, interests in such corporation are not United States real property interests by reason of section 897(c)(1)(B). (4) Transferee receives qualifying statement(A) In generalThis paragraph applies to the disposition if the transferee receives a qualifying statement at such time, in such manner, and subject to such terms and conditions as the Secretary may by regulations prescribe. (B) Qualifying statementFor purposes of subparagraph (A), the term “qualifying statement” means a statement by the Secretary that—(i) the transferor either—(I) has reached agreement with the Secretary (or such agreement has been reached by the transferee) for the payment of any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, or (II) is exempt from any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, and (ii) the transferor or transferee has satisfied any transferor’s unsatisfied withholding liability or has provided adequate security to cover such liability. (5) Residence where amount realized does not exceed $300,000This paragraph applies to the disposition if—(A) the property is acquired by the transferee for use by him as a residence, and