Instructions For Form 8288 (Page 2 of 5) in pdf

the tax. Corporate officers or other

See Regulations sections 1.897-1 and

exception; however, if you do not in fact

responsible persons may be subject to a

-2 for more information. Also see

use the property as a residence, the

penalty under section 6672 equal to the

Transferred property that is not a U.S.

withholding tax may be collected from

amount that should have been withheld

real property interest, later.

you.

and paid over to the IRS.

Qualified investment entity. A qualified

This exception applies whether or not

investment entity is:

the transferor (seller) is an individual,

Definitions

•

A real estate investment trust (REIT),

partnership, trust, corporation, or other

and

Transferee. Any person, foreign or

transferor. However, this exception does

•

A regulated investment company (RIC)

domestic, that acquires a U.S. real

not apply if the actual transferee (buyer)

that is a U.S. real property holding

property interest by purchase, exchange,

is not an individual, even if the property is

corporation.

gift, or any other transfer.

acquired for an individual.

For more information, see Pub. 515,

Transferor not a foreign person. You

Transferor. For purposes of this

Withholding of Tax on Nonresident Aliens

receive a certification of nonforeign status

withholding, this means any foreign

and Foreign Entities.

from the transferor, signed under

person that disposes of a U.S. real

Domestically controlled qualified

penalties of perjury, stating that the

property interest by sale, exchange, gift,

investment entity. A qualified

transferor is not a foreign person and

or any other disposition. A disregarded

investment entity is domestically

containing the transferor’s name,

entity cannot be the transferor for

controlled if at all times during the testing

address, and identification number (social

purposes of section 1445. Instead, the

period less than 50% in value of its stock

security number (SSN) or employer

person considered as owning the assets

was held, directly or indirectly, by foreign

identification number (EIN)). The

of the disregarded entity for federal tax

persons. The testing period is the shorter

transferor can give the certification to a

purposes is regarded as the transferor. A

disregarded entity for these purposes

of (a) the 5-year period ending on the

qualified substitute (defined on this page).

date of the disposition (or distribution), or

The qualified substitute gives you a

means an entity that is disregarded as an

(b) the period during which the entity was

statement, under penalties of perjury, that

entity separate from its owner under

in existence.

the certification is in the qualified

Regulations section 301.7701-3, a

substitute’s possession. If you receive a

qualified real estate investment trust

Amount realized. The sum of the cash

certification (or statement), the

subsidiary as defined in section 856(i), or

paid or to be paid (not including interest

withholding tax cannot be collected from

a qualified subchapter S subsidiary under

or original issue discount), the fair market

you unless you knew that the certification

section 1361(b)(3)(B).

value of other property transferred or to

(or statement) was false or you received a

be transferred, and the amount of any

Qualified substitute. For this purpose,

notice from your agent, the transferor’s

liability assumed by the transferee or to

a qualified substitute is (a) the person

agent, or the qualified substitute that it

which the U.S. real property interest is

(including any attorney or title company)

was false. The certification must be

subject immediately before and after the

responsible for closing the transaction,

signed by the individual, a responsible

transfer. Generally, the amount realized

other than the transferor’s agent, and (b)

officer of a corporation, a general partner

for purposes of this withholding is the

the transferee’s agent.

of a partnership, or the trustee, executor,

sales or contract price.

Withholding agent. For purposes of this

or fiduciary of a trust or estate.

Date of transfer. The first date on which

return, this means the buyer or other

A disregarded entity may not certify

consideration is paid or a liability is

transferee who acquires a U.S. real

that it is the transferor for U.S. tax

assumed by the transferee. However, for

property interest from a foreign person.

purposes. Rather, the owner of the

purposes of sections 1445(e)(2), (3), and

disregarded entity is treated as the

(4), and Regulations sections

Foreign person. A nonresident alien

transferor of the property and must

1.1445-5(c)(1)(iii) and 1.1445-5(c)(3), the

individual, a foreign corporation that does

provide the certificate of nonforeign status

date of transfer is the date of distribution

not have a valid election under section

to avoid withholding under section 1445.

that creates the obligation to withhold.

897(i) to be treated as a domestic

Payment of consideration does not

corporation, a foreign partnership, a

A foreign corporation electing to be

include the payment before passage of

foreign trust, or a foreign estate. A

treated as a domestic corporation under

legal or equitable title of earnest money

resident alien individual is not a foreign

section 897(i) must attach to the

(other than pursuant to an initial purchase

person.

certification a copy of the

contract), a good-faith deposit, or any

acknowledgment of the election received

U.S. real property interest. Any

similar amount primarily intended to bind

from the IRS. The acknowledgment must

interest, other than an interest solely as a

the parties to the contract and subject to

state that the information required by

creditor, in:

forfeiture. A payment that is not forfeitable

Regulations section 1.897-3 has been

1. Real property located in the United

may also be considered earnest money, a

determined to be complete. If the

States or the U.S. Virgin Islands.

good-faith deposit, or a similar sum.

acknowledgment is not attached, you may

2. Certain personal property

Exceptions

not rely on the certification. Keep any

associated with the use of real property.

certification of nonforeign status you

3. A domestic corporation, unless it is

You are not required to withhold if any of

receive in your records for 5 years after

shown that the corporation was not a U.S.

the following applies.

the year of transfer.

real property holding corporation during

Purchase of residence for $300,000 or

You may also use other means to

the previous 5 years (or during the period

less. One or more individuals acquire

determine that the transferor is not a

in which the transferor held the interest, if

U.S. real property for use as a residence

foreign person. But if you do, and it is

shorter).

and the amount realized (sales price) is

later determined that the transferor is a

not more than $300,000. A U.S. real

foreign person, the withholding tax may

A U.S. real property interest does not

property interest is acquired for use as a

be collected from you.

include:

residence if you or a member of your

1. An interest in a domestically

family has definite plans to reside in the

Late notice of false certification. If,

controlled qualified investment entity.

property for at least 50% of the number of

after the date of transfer, you receive a

2. An interest in a corporation that has

days the property is used by any person

notice from your agent, the transferor’s

disposed of all its U.S. real property

during each of the first two 12-month

agent, or the qualified substitute that the

interests in transactions in which the full

periods following the date of transfer. Do

certification of nonforeign status is false,

amount of any gain was recognized as

not take into account the number of days

you do not have to withhold on

provided in section 897(c)(1)(B).

the property will be vacant in making this

consideration paid before you received

3. An interest in certain publicly traded

determination. No form or other document

the notice. However, you must withhold

corporations, partnerships, and trusts.

is required to be filed with the IRS for this

the full 10% of the amount realized from

-2-

Instructions for Form 8288 (Rev. 6-2011)

Instructions For Form 8288 Page 2

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