Foreign investor's guide lawyer's title 2013

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Foreign Buyer’s Guide

For Arizona Home Purchases

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Ahwatukee15215 S. 48th St. | Building 5 | Suite 154

Phoenix, AZ 85044(480) 706-4000

Arrowhead17100 N. 67th Ave. | Building 2 | Suite 200

Glendale, AZ 85308(623) 979-6060

Gilbert225 E. Germann Rd. | Suite 130

Gilbert, AZ 85297(480) 545-4633

Camelback Esplanade 2425 E. Camelback Rd. | Suite 700

Phoenix, AZ 85016(602) 954-6774

Kierland14648 N. Scottsdale Rd. | Suite 125

Scottsdale, AZ 85254(480) 315-8090

Ocotillo Falls1045 W. Queen Creek Rd. | Suite 5

Chandler, AZ 85248(480) 899-0799

Palm Valley 13341 W. Indian School Rd. | Suite C-305

Litchfield Park, AZ 85340(623) 535-4210

Paradise Valley11211 N. Tatum Blvd. | Suite 220

Phoenix, AZ 85028(602) 996-0055

Sunland510 S. Greenfield Rd.

Mesa, AZ 85206(480) 830-4995

Surprise15003 W. Bell Rd. | Suite 150

Surprise, AZ 85374(623) 518-2795

Tempe / Lakeshore4677 S. Lakeshore Dr. | Suite C-9

Tempe, AZ 85282(480) 897-8488

SURPRISE

ARROWHEAD

PALM VALLEY

ESPLANADE

LAKESHORE

AHWATUKEE

SUNLAND

GILBERT

OCOTILLO

KIERLAND

PARADISE VALLEY

Our Local Offices



Same-Day Availability• Electronic Payment/Wire Transfer: This is the preferred method for loan proceeds and Buyer’s closing funds• Cash: Special requirements and approvals must be obtained prior to accepting cash

Arizona Good Funds LawHouse Bill 2074 requires that an escrow agent not distribute money from an escrow account until funds related to the transaction have been deposited, have cleared and are available. The law specifies when specific forms of payments are available for the escrow agent to disburse.

Lawyers Title Of Arizona Guidelines As To The Availability Of FundsAll availability dates are based on funds deposited in our bank and the days are considered business days. A business day is defined as a calendar day other than Saturday or Sunday and most major holidays.

Drafts: No disbursements can be made against a draft until it has been submitted for collection to our depository bank and we have confirmation that final payment has been received and credited to our account.

Third Party Checks: It is Lawyers Title of Arizona’s policy not to accept third party checks: such as, any check drawn on a non-financial institution account, payable to a payee other than Lawyers Title of Arizona and subsequently endorsed over to Lawyers Title of Arizona. The one exception: United States Treasury Checks payable to Farmers Home Administration’s borrower, endorsed to Lawyers Title of Arizona. Any variance from this policy must be approved by senior management.

Foreign Checks: It is the policy of Lawyers Title of Arizona NOT to accept foreign checks into escrow.

5th Day• Official Checks: Out -of-State and/or NOT Drawn on FDIC Insured Institution• Money Orders (Except Postal Money Order - See “Next Day”)• “On-US” (Lawyers Title of Arizona) Checks, Non-Local, Other• Other Checks: Personal, Corporate, Credit Union, Money Market and Travelers Checks• Non-Local, Other

2nd Day• Other Checks: Personal, Corporate (including Loan Funding Checks) Checks, Credit Union, Money Market, and Travelers Checks - Must be Local

Next Day• Official Checks: Must be In-State checks drawn on a FDIC Insured Institution• Cashiers, Certified and Tellers Checks• U.S. Treasury Checks• Postal Money Orders (Other money orders see “5th day”)• Federal Reserve, Federal Credit Union and Federal Home Loan Bank Checks• State and Local Governments Check: Must be In-State• “On-Us” (Lawyers Title of Arizona) Checks: Must be Local or In-State



Home Buying Process Chart

3© 2009 Lawyers Title Insurance Corporation 3

HOME BUYING PROCESS CHART

HOME BUYER

Interview& SelectAgent

EvaluateNeeds

& Wants

Pre-Qualifyfor

Home Loan

Find thePerfectHome

Offer toPurchase

Home

Offer Accepted;Negotiate

Terms

PurchaseAgreementAccepted

SecureLender

BeginLoan

Process

PropertyInspections

PropertyAppraisal

PurchaseHomeowner’s

Insurance

LoanApproval

RemoveFinancial

Contingencies

OPEN ESCROW

Choose Escrow & Title

Company

DepositEarnestMoney

Seller’s TransferDisclosureStatement

Title SearchPreliminary

Report

CLOSE ESCROW

DepositBalance of

Down Paymentto Escrow

Sign Closing& LoanPapers

LoanFunding

RecordDocuments

EscrowClosed!

19834 Fid LT Handbook 24Pg:Layout 1 2/16/11 1:06 PM Page 3

Choose:



Ways To Take Title In ArizonaNote: Arizona is a community property state. Property acquired by a husband and wife is presumed to be community property unless legally specified otherwise. Title may be held as “Sole and Separate.” If a married person acquires title as sole and separate, his or her spouse must execute a disclaimer deed to avoid the presumption of community property. Parties may choose to hold title in the name of an entity, e.g., a corporation; a limited liability company; a partnership (general or limited); or a trust. Each method of taking title has certain significant legal and tax consequences. Therefore, you are encouraged to obtain advice from an attorney or other qualified professional.

Community PropertyCommunity Property

with the Right of Survivorship

Joint Tenancy with the Right of Survivorship Tenancy in Common

Requires a valid marriage between two persons.

Requires a valid marriage between two persons.

Parties need not be married; may be more than two joint tenants.

Parties need not be married; may be more than two tenants in common.

Each spouse holds an undivided one-half interest in the estate.

Each spouse holds an undivided one-half interest in the estate.

Each joint tenant holds an equal and undivided interest in the estate, unity of interest.

Each tenant in common holds an undivided fractional interest in the estate. Can be disproportionate, e.g., 20% and 80%; 60% and 40%; 20%, 20%, 20% and 40%; etc.

One spouse cannot partition the property by selling his or her interest.

One spouse cannot partition the property by selling his or her interest.

One joint tenant can partition the property by selling his or her joint interest.

Each tenant share can be conveyed, mortgaged or devised to a third party.

Requires signatures of both spouses to convey or encumber.

Requires signatures of both spouses to convey or encumber.

Requires signatures of all joint tenants to convey or encumber the whole.

Requires signatures of all tenants to convey or encumber the whole.

Each spouse can devise (will) one-half of the community property.

Estate passes to the surviving spouse outside of probate.

Estate passes to surviving joint tenants outside of probate.

Upon death the tenant’s proportionate share passes to his or her heirs by will or intestacy.

Upon death the estate of the decedent must be cleared through probate, affidavit or adjudication.

No court action required to clear title upon the first death.

No court action required to clear title upon the death of joint tenant(s).

Upon death the estate of the decedent must be cleared through probate, affidavit or adjudication.

Both halves of the community property are entitled to a stepped up tax basis as of the date of death.

Both halves of the community property are entitled to a stepped up tax basis as of the date of death.

Deceased tenant(s) share is entitled to a stepped up tax basis as of the date of death.

Each share has its own tax basis.



FIRPTA (Foreign Investment in Real Property Tax Act)

Buying a Home in Arizona as a Foreign Buyer and how FIRPTA applies!

• All funds deposited for the escrow must be by wire transfer.

• Out of US Wire Transfers / Swift Fee: International transfers are executed through SWIFT, Society for Worldwide Interbank Financial Telecommunication, and there is an additional charge for this type of transfer. - The charge is deducted from the wired funds and varies from bank to bank. The charge is typically a flat rate and does not exceed $50.00, so we recommend that our clients wire an additional $50.00 when wiring from outside of the U.S.

• When a foreign owner gets ready to sell, they could be subject to a 10% (of the Sales Price) withholding unless the transaction is exempt from FIRPTA.

• Most common exemption: Sales Price is not more than $300K. The Buyer or a member of their family must have plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two twelve month periods after sale.

• Other Exemptions that may apply are: - Seller to provide a certificate showing they are not a foreign seller - Seller receives a withholding certificate from IRS excusing withholding

If applicable see forms:• W-7 (application for IRS Individual Taxpayer Identification Number)• 8288-B (Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests)

Go to www.irs.gov and click on Forms and Publications to get copies of these and other forms.



FIRPTA (Foreign Investment in Real Property Tax Act)

is Seller a US citizenor a US Resident?

Does the Buyer have definite plans to use the property as theirresidence and sale

price does not exceed $300,000?**

YesComplete Certificationof non-foreign status

Is Seller recognizing a gain of less than

the 10%

NoBuyer should

request for 10% withholding

YesSee your CPA or tax attorney

regarding application form 8288B for an IRS Withholding Certificate.

Carefully review The Lawyers Title agreement concerning

FIRPTA withholding. All parties, including seller’s tax professional, must agree and

execute this agreement.

Escrow provides an estimated seller statement.

YesComplete buyer’s

declaration for $300,000 residence exemption form

No

***NOTE: Escrow will withhold 10% pending receipt of Withholding Certificate, unless the parties agree otherwise.

***IRC REQUIRES: The BUYER acquires the property for use as a home and the amount realized (sales price) is not more than $300,000. The BUYER or a member of their family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12 month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant.

ALL FORMS in this book are for

SAMPLE PURPOSES ONLY.Please check with http://www.aaronline.com/ or the appropriate

government agency website for the most up to date forms.

Form W-7(Rev. January 2012)Department of the Treasury Internal Revenue Service

Application for IRS Individual Taxpayer Identification Number

▶ For use by individuals who are not U.S. citizens or permanent residents. ▶ See instructions.

OMB No. 1545-0074

An IRS individual taxpayer identification number (ITIN) is for federal tax purposes only.

Before you begin:

• Do not submit this form if you have, or are eligible to get, a U.S. social security number (SSN).• Getting an ITIN does not change your immigration status or your right to work in the United States and does not make you eligible for the earned income credit.

FOR IRS USE ONLY

Reason you are submitting Form W-7. Read the instructions for the box you check. Caution: If you check box b, c, d, e, f, or g, you must file a tax return with Form W-7 unless you meet one of the exceptions (see instructions).

a Nonresident alien required to get ITIN to claim tax treaty benefit

b Nonresident alien filing a U.S. tax return

c U.S. resident alien (based on days present in the United States) filing a U.S. tax return

d Dependent of U.S. citizen/resident alien

e Spouse of U.S. citizen/resident alien} Enter name and SSN/ITIN of U.S. citizen/resident alien (see instructions) ▶

f Nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exception

g Dependent/spouse of a nonresident alien holding a U.S. visa

h Other (see instructions) ▶

Additional information for a and f: Enter treaty country ▶ and treaty article number ▶

Name (see instructions)

1a First name Middle name Last name

Name at birth if different . . ▶

1b First name Middle name Last name

Applicant’s mailing address

2 Street address, apartment number, or rural route number. If you have a P.O. box, see separate instructions.

City or town, state or province, and country. Include ZIP code or postal code where appropriate.

Foreign (non- U.S.) address (if different from above) (see instructions)

3 Street address, apartment number, or rural route number. Do not use a P.O. box number.

City or town, state or province, and country. Include ZIP code or postal code where appropriate.

Birth information

4 Date of birth (month / day / year) Country of birth City and state or province (optional) 5 Male

Female

Other information

6a Country(ies) of citizenship 6b Foreign tax I.D. number (if any) 6c Type of U.S. visa (if any), number, and expiration date

6d Identification document(s) submitted (see instructions) Passport Driver’s license/State I.D.

USCIS documentation Other

Issued by: No.: Exp. date: / /

Date of entry into the United States (MM/DD/YYYY) / /

6e Have you previously received a U.S. temporary taxpayer identification number (TIN) or employer identification number (EIN)?

No/Do not know. Skip line 6f.

Yes. Complete line 6f. If more than one, list on a sheet and attach to this form (see instructions).

6f Enter: TIN or EIN ▶ andName under which it was issued ▶

6g Name of college/university or company (see instructions)City and state Length of stay

Sign Here

Keep a copy for your records.

Under penalties of perjury, I (applicant/delegate/acceptance agent) declare that I have examined this application, including accompanying documentation and statements, and to the best of my knowledge and belief, it is true, correct, and complete. I authorize the IRS to disclose to my acceptance agent returns or return information necessary to resolve matters regarding the assignment of my IRS individual taxpayer identification number (ITIN), including any previously assigned taxpayer identifying number.

▲ Signature of applicant (if delegate, see instructions)

Name of delegate, if applicable (type or print)

Date (month / day / year)

/ /

Phone number

Delegate’s relationship to applicant

▲

Parent Court-appointed guardian

Power of Attorney

Acceptance Agent’s Use ONLY

▲

Signature Date (month / day / year)

/ /

Phone

Fax▲

Name and title (type or print) Name of company EIN

Office Code

For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 10229L Form W-7 (Rev. 1-2012)

SAMPLE

Application for Withholding Certificate for Dispositionsby Foreign Persons of U.S. Real Property Interests

Form 8288-B OMB No. 1545-1060

(Rev. November 2006)

Department of the TreasuryInternal Revenue Service

Identification number Name of withholding agent (see instructions) 4

Address where you want withholding certificate sent (street address, apt. or suite no., P.O. box, or rural route number)

City, state or province, and country (if not U.S.). Include ZIP code or postal code where appropriate.

Applicant is:

Transferee

1 Identification number Name of transferor (attach additional sheets if more than one transferor)

Street address, apt. or suite no., or rural route. Do not use a P.O. box.


Identification number Name of transferee (attach additional sheets if more than one transferee) 2

6 Description of U.S. real property transaction: Date of transfer (month, day, year) (see inst.)

Contract price $

b a

Type of interest transferred:

Associated personal property Domestic U.S. real property holding corporation

Real property

c

Use of property at time of sale:

Personal

Rental or commercial

Other (attach explanation)

d Adjusted basis $

e

Location and general description of property (for a real property interest), description (for associated personal property), orthe class or type and amount of the interest (for an interest in a U.S. real property holding corporation). See instructions.

f

Check the box to indicate the reason a withholding certificate should be issued. See the instructions for information that mustbe attached to Form 8288-B.

7

The transferor is exempt from U.S. tax or nonrecognition treatment applies.

a The transferor’s maximum tax liability is less than the tax required to be withheld.

b The special installment sales rules described in section 7 of Rev. Proc. 2000-35 allow reduced withholding.

c 8 No Yes Does the transferor have any unsatisfied withholding liability under section 1445?

9 No Yes Is this application for a withholding certificate made under section 1445(e)? If “Yes,” check the applicable box in a and the applicable box in b below.

1445(e)(5)

1445(e)(3)

1445(e)(2)

1445(e)(1)

Type of transaction:

a Other person required to withhold. Specify your title (e.g., trustee) �

Taxpayer

Applicant is:

b

Under penalties of perjury, I declare that I have examined this application and accompanying attachments, and, to the best of my knowledge and belief, they are true,correct, and complete.

Date Title (if applicable) Signature

For Privacy Act and Paperwork Reduction Act Notice, see the instructions. Form 8288-B (Rev. 11-2006)

Transferor

Cat. No. 10128Z

� Please type or print.

Street address, apt. or suite no., or rural route. Do not use a P.O. box.


Phone number (optional)

( )

3 a b

Name of estate, trust, or entity (if applicable) c Identification number d

5

See the instructions for information required to be attached.

For the 3 preceding tax years:

g (1)

(2)

Were U.S. income tax returns filed relating to the U.S. real property interest? If “Yes,” when and where were those returns filed? �

No Yes

No Yes Were U.S. income taxes paid relating to the U.S. real property interest? If “Yes,” enter the amount of tax paid for each year �

1445(e)(6)

SAMPLE

Foreign investor's guide lawyer's title 2013

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