Question about potential circumventing federal FIRPTA withholding

Hello,

Thanks in advance for any assistance. I have a client who now lives overseas that may be selling their house in the United States for just over the $300,000 threshold so FIRPTA withholding may be required. The house is ultimately being sold at a loss.

While we will apply for a withholding certificate with a Form 8288B, I am not confident the certificate will get issued in time for the closing.

Suppose the buyer and seller agree on a $300,000 selling price (so no withholding would be required) AND the buyer also agrees to pay $1000 of the seller's attorney fees at closing. Is the $1000 for the seller's attorney fees paid by the buyer considered part of the sales price?

Thanks,

Chris A Johnson, EA

that may be selling their house in the United States for just over the $300,000 threshold so FIRPTA withholding may be required. The house is ultimately being sold at a loss.

confident the certificate will get issued in time for the closing.

withholding would be required) AND the buyer also agrees to pay $1000 of the seller's attorney fees at closing. Is the $1000 for the seller's attorney fees paid by the buyer considered part of the sales price?

I spoke with a local escrow officer and a ereal estate broker to understand the definition of "amount realized" as specified in the code and regs and the use of "sales price" in IRS literature. Both of them told me that the amount they use for the $300K exception is the contract sales price identified on lines 101 and 401 of the HUD-1 Settlement Statement. This is the gross selling price.

The payment of the $1000 for attorney fees would not be reflected on Lines 101/401 of the HUD settlement.