Form I-290 South Carolina & FIRPTA

If you are Canadian who is selling property in South Carolina, the sale is governed by:

1 Form I-290 (Nonresident Real Estate Withholding)

South Carolina law requires a buyer to withhold a percentage of the gain on the disposition of South Carolina real estate by non-residents (in our case, Canadians), and send it to the South Carolina Department of Revenue. Form I-290 is the vehicle for reporting the details of the transaction.

The buyer must remit the withholding on or before the 15th day of the month following the month of the sale.

If there is more than one seller, a separate Form I-290 should be completed for each seller.

2 FIRPTA FIRPTA (Foreign Investment in Real Property Tax Act)

FIRPTA is a U.S. federal law that the IRS enforces to ensure that Canadians and non-residents meet their federal tax obligations from the disposition of U.S. property.

Note: Dispositions include not only a sale, but also an exchange, liquidation, gift, transfer, or redemption. Our discussion refers to a sale, which is the most common disposition of U.S. property.

Steps in Selling Property in South Carolina

1 List Your Property for Sale & Accept an Offer

After you have listed your property with a realtor, you will next choose a title/escrow company that has experience working with Canadian sellers and with the FIRPTA and Form I-290 requirements.

Once you have accepted an offer, and the conditions and contingencies have been removed, you are ready for the next step.

2 Determine Your FIRPTA & Form I-290 Withholding Rates & Exemptions

To ensure that the IRS and the South Carolina Department of Revenue are able to collect any taxes owing, the buyer is designated as the withholding agent. The buyer’s title/escrow agent’s responsibility is to withhold the required amount from the purchase price and remit the withholdings to both tax authorities.

South Carolina Withholding: There are three scenarios that determine the withholding amount:

7% of the capital gain recognized in the Seller’s Affidavit.
7% of the amount realized on the sale, if no affidavit is provided.
If this is a sale of your principal residence, it is not subject to the withholding tax.

FIRPTA Withholding: See the FIRPTA withholding rates and exemptions.

3 File All FIRPTA and South Carolina Compliance Forms

After all conditions and contingencies have been removed and the sale is firm, the relevant FIRPTA and South Carolina compliance forms need to be completed. This must be done prior to closing.

FIRPTA: see Forms 8288, 8288-A, and 8288-B.

South Carolina: see Form I-290 and Form I-295 (Seller’s Affidavit).

4 ITIN Number Requirement

An Individual Tax Identification Number (ITIN) is required by all Canadians before filing their U.S. federal and state tax returns. The amount withheld from your sale cannot be properly applied, and possibly refunded, to your account until your tax returns are filed.

5 File All Tax Returns

Each of the sellers is required to individually file these tax returns:

S. federal personal income tax return.
South Carolina personal income tax return.
Canadian personal tax return.

You may be eligible to claim a foreign tax credit on your Canadian return if you paid U.S. tax. The CRA may ask for documentation of your payment and IRS transcripts for your claim to be allowed.

Your One-Stop Service When Selling Property in South Carolina

Navigating all the South Carolina & FIRPTA requirements for selling your South Carolina property isn’t easy. But when you work with FIRPTA CANADA, you can relax.

Like our country’s national animal, we work industriously on your project until it’s successfully completed. We will:

File all required forms.
Provide your title or escrow company with all documentation.

After the closing of your sale, we will do the following:

Assist you in obtaining an ITIN (Individual Taxpayer Identification Number) for each of the owners of the property. FIRPTA CANADA is an approved IRS Certifying Acceptance Agent (CAA).
File the U.S. federal and South Carolina tax returns, and Canadian tax returns for each seller.

Let the Eager Beavers Handle the Entire FIRPTA Process for You

Sit back and relax, and let us chew away at your transaction from start to finish. To make it as easy as possible for you, we can work with you in person, virtually, or a combination of both. As your fellow Canadians, we won’t let you down.

Get Started Today

Our services can be provided in person or virtually through our two offices, located in Calgary and Toronto. Contact us to start the process!

FIRPTA CANADA has been outstanding in preparing our US tax returns and submitting them to IRS plus continuing to assist us in dealing with a FIRPTA problem created by the purchasers agents when we sold our US property. FIRPTA CANADA personnel are very knowledgeable and easy to deal with. They respond to our inquiries quickly and are totally informative about the process of preparation and submission of information and documentation.

We retained FIRPTA Canada to help us on the sale of real property in the US, specifically the calculation of withholding taxes, application to the IRS for Individual Taxpayers ID Numbers, and the filing of our US tax returns. Asif and his team were always prompt and clear, and working with them was very easy. I absolutely recommend FIRPTA!

Having sold a property in the US, we were somewhat overwhelmed by the amount of paperwork and questions we were faced with. We found Asif well-versed in all that was required. He responded to our questions promptly, he was relaxed, friendly and we were relieved by his ‘no problem’ attitude. We would highly recommend Asif and FIRPTA.

Asif was excellent! Sold our US property and he was our Canadian liaison linked to the Montana lawyer. We understand the complicated process SO much better! And Asif fit us in this morning on short notice even though it is tax season. He also helped us understand how he will help us next year to file US tax forms. Appreciate the superb service today!