Glossary

For FIRPTA, the total the seller receives: cash paid, the fair value of other property transferred, and liabilities the buyer assumes or that attach to the property. Withholding is a percentage of this, not of the gain.

A single-member LLC that, by default, is ignored for U.S. income tax, so its income is reported by its owner. A foreign-owned one still has its own information filing (Form 5472).

For estate tax, where a person lives with the intention of remaining. A non-citizen who is not domiciled in the U.S. is taxed only on U.S.-situated assets, with a much smaller exemption.

Income treated as connected with a U.S. trade or business. It is taxed on a net basis at graduated rates instead of the flat 30% on gross income.

Employer Identification Number. The federal tax number for an entity such as an LLC, applied for on Form SS-4.

An agreement between the U.S. and another country that can change how U.S. estate tax applies to that country's residents. Only a small number of countries have one.

Foreign Investment in Real Property Tax Act. Requires the buyer to withhold part of the price when a foreign person sells a U.S. real property interest.

A mortgage product for borrowers without U.S. credit history or residence, underwritten and priced differently from standard U.S. loans.

The U.S. income tax return for a non-resident individual, used to report rental income and claim deductions when taxed on a net basis.

Information return a foreign-owned single-member LLC files, with a pro forma Form 1120, to report transactions with its owner. Late or missing filings carry a heavy penalty.

The U.S. estate tax return for a non-resident, non-citizen decedent.

Filed by the buyer (the withholding agent) to report and pay over FIRPTA withholding. Form 8288-A is the statement that goes to the seller.

Application for a withholding certificate, used to reduce or eliminate FIRPTA withholding before or at closing.

Application for an ITIN.

Given to the payer of rent to certify that the income is effectively connected with a U.S. trade or business, so the 30% gross withholding does not apply.

Individual Taxpayer Identification Number. Issued to individuals who must file U.S. tax returns but cannot get a Social Security number.

An election that lets a non-resident treat U.S. real property income as effectively connected, so rent is taxed on net income after deductions instead of 30% of gross.

Assets treated as located in the U.S. for estate tax, which includes U.S. real estate. These are what the estate of a non-domiciled owner is taxed on.

A credit against U.S. estate tax. The amount available to a non-resident's estate is far smaller than a U.S. person's.

The person required to withhold tax on a payment, for FIRPTA generally the buyer, who can be held liable for any amount not withheld.