This episode provides additional FIRPTA operational details including form preparation, IRS submission timelines, and strategies for working with title companies on foreign seller withholding.
Key Takeaways:
- Multiple Approaches to FIRPTA Compliance Buyers can either reduce purchase price to account for 15% withholding or withhold from seller proceeds—both arrive at same economic outcome but differ in contract structure and seller communication.
- Title Companies Simplify Complex Process Self-closing FIRPTA deals require navigating IRS forms and tight deadlines—paying title company fees for form prep and submission eliminates administrative burden and penalty risk.
- Cost Basis Impacts Refund Potential FIRPTA withholds 15% of gross sales price assuming zero cost basis—sellers who purchased property years ago for substantial amounts will likely receive partial refunds when filing actual tax returns.
Listen to the full episode for comprehensive foreign seller transaction tactics and FIRPTA compliance strategies.
(Podcast transcript below)
Welcome to Get Serious. So today I just wanted to share again, a more unique DD scenario here. I know I had mentioned the last week about a waterfront property we are pursuing in Florida, very high purchase price, a luxury lot here, but you know, infill again, which has been
Bane of our existence in many past deals that not many, but a few glaring examples of past deals that we’ve done that did not work out the best because, you know, in fill lots, if you mess up on even one piece of the DD, you really only have one type of buyer. So there’s no fallback plan to potentially pivot if the, you know, core residential usage is.
disturbed in any kind of form or fashion. So we are always a dead set focused on figuring out every last piece of information that we might need to dive into to sort out all of that remaining DD. So in this case, you know, like I mentioned last week, you know, there’s a bunch of, or not a bunch of, but rather, you know,
At least a single nest of burrowing owls on the property and just had to sort out Okay, is this you know, just that permanently affect the build ability? No, it doesn’t but you know, there’s some considerations to keep in mind here inside business partner who’s You know Probably more conservatively minded than than even I am but you know us two combined when it comes to
investment decisions, like it’s pretty dangerous combo. So, you know, especially for high price properties, you know, he does a full review and opinion on it as well too, and some follow up questions and things that I hadn’t initially considered or not as deeply. And so one of them was just being okay, you know, kind of climate change risk, the flood risk of this particular island, you know, it’s off the.
coast of Florida. you know, especially we know a lot of these weather events, you know, pretty much every single year that passes by there’s like, you know, some crazy severe weather event in some part of the country. Yeah, that that’s just become like routine parts of life for us nowadays. And, you know, especially the flood risk and, you know, near the coast, like we have no idea what
the potential might be for rising sea levels and maybe putting Florida mostly or partially on underwater over the next half century or more. That’s a little hard to predict fully out. And that’s not really our game as investors. Yeah, we want to be conservative and think about the future here, but we’re not speculative either. We can’t predict.
five years in the future, let alone 10, 15, 20 to 50 years. Like that’s just outside of our game here. And we don’t expect most buyers to really be considering that as well either. You know, it’s going to be outside the lifetime of a lot of these buyers. Like a lot of folks just aren’t thinking that far in the future. And so, you know, we still focus on, okay, what is the core market showing us like right now? That is,
what we’re trying to orient around versus that speculative game. you know, nevertheless, even considering climate change and weather risk in an immediate term, like over the coming, I think, yeah, right now, fall, isn’t that usually like hurricane time? It seems like we haven’t gotten many reports of these this year. Maybe it’s kind of a weaker hurricane season compared to in years past.
But we want to ensure, okay, given some of these crazier storms, has this place been hit a bit more? How are services affected? Is it gonna be put completely offline, destroyed houses and so forth? So that’s something that is certainly worth considering when we’re dealing with land, especially from a residential perspective. And we had just bought and sold a property.
where it was that kind of crazy, you know, catastrophic hurricane Halloween that ripped up the Eastern coast and the Carolinas and Asheville specifically. You know, we bought a property in South Carolina that was like just missed by that hurricane. And it took down a lot of, you know, nearby power lines and other properties. We were kind of spared there. So.
but it took like a long time, a couple of weeks, I think for the title company to come back online and even have service to close the deal for us. So, you know, just being mindful of how quick communities can kind of bounce back, in the case of storms here. that’s just something that we like to, you know, be more mindful of now. So, you know, I went back to the broker and was like, Hey, yeah, can you, can you kind of give us an idea on the climate?
Again, we’re not predicting like 50 years in the future, but just like, how’s it handled recently? And a particular broker we’re working with lived on the island between 2007 and 2017. And they had experienced a couple of larger storms. I want to say Hurricane Irma passed through that one. And he was like, yeah, you know, it was a pretty big storm, definitely caused some damage, but
you know, the Island was back up within a week, like, he worked or volunteered with the police force on the Island. so, was able to, you know, kind of get a firsthand look on, how things were getting back up in and running. It’s like, yeah, this is just, it’s a well organized Island here. So, you know, at least from that standpoint, emergency services and kind of the community, has the wherewithal to deal with this climate risk.
And also the particular property we’re looking at is more on the northeast side of the island. So it’s more protected from, you know, where storms would typically be coming. I know, you know, sometimes I think there was that big storm that was approaching Tampa. it last year? Like two seasons ago, I forget, it to blend together and it’s like, you know, depending on the,
direction that the hurricane hits, like you can get like some backwash in like a storm, a storm surge from the direction of the winds coming back. so like, even if you are more inland, if you’re in a Bay area, I think that was like the big concern. You know, it kind of missed Tampa from, from that side. but that was like kind of worst case scenario where even folks who are on the West or the East side of the Bay, which you would think a bit more protected where we’re actually going to be at the,
highest risk there. So, you know, it’s not fully protected, like comparatively, you know, to properties that are on the western most side or closest to the Gulf and the ocean. It’s just, you know, at less risk from the elements. So he’s like, yeah, if there’s evacuation orders, you should probably obey them. But he’s like, hey, if you built a solid house there, like, and based on his experience living there, yeah, you could probably ride out the storm.
in, most scenarios here, it’s like pretty reassuring to hear from, from that perspective against somebody who lived on the island for 10 some odd years, saw some bigger storms. so that’s just, again, something to kind of, keep in mind. and he was also like, yeah, just the fact that, you know, the grass is still like solid on that particular, plat.
or parcel, like it’s just indicating, yeah, the ocean isn’t like overriding the seawall and like that would disturb the underlying lawn a lot more. So you can, you know, even though it is in like a coastal floodplain area, you can rest assured that, you know, the engineering is solid and it’s not like routinely flooding or anything like that. So that’s just something else to keep in mind again. Can’t really predict that far in the future for it, but for an immediate marketability risk and you
ability to handle some of the, you know, black swan event storms that, know, it that aren’t really black swan anymore. Seem to come up like yearly. you know, we, we feel better position from, from that perspective. So, you know, there were a couple other questions that were solid there. I’ll probably touch on those later, but I just wanted to mention that one. It was like, yeah, something that’s not immediately on your DD list here, but is certainly worth checking in on.
that again, can kind of like a lot of this DD even though like we’re so hardcore, you know, sometimes I’ll feel like, this just seems so good. Like we can just kind of hand wave it away. It’s probably not an issue, but it’s like, you know what? No, like it’s going to take you, you know, an extra five to 10 minute phone call. Just make the call and figure out, know, ask these questions and try to get a better understanding of the full situation. You’re going to rest easier at night. You got a lot of money on the line.
potentially for this deal here at risk. So like don’t mess it up. So take that time, ask those extra questions. More than likely it’s not going to come into play, but in case it does, at least you you covered that avenue prior to the wire going out. So that’s always most important part. But with that in mind, hopefully that one is helpful. SeriousLand.Capital for any funding needs and 50K purchase price minimum.
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