The buyer wants to skip FIRPTA because they say the house is a future residence, but they also plan to rent it for a while. Is that still safe?
I am a Canadian seller and the buyer is trying to use the residence exception to avoid withholding. The problem is that in side conversations they also talk about renting the house before eventually moving in, which makes me nervous about whether the exception really fits. I do not want the deal to close smoothly now and then become a tax-liability argument later.
My question is whether this is the kind of fact pattern where the exception starts looking weak. If the residence rule is strict and the buyer is the one taking the risk, I want that understood clearly before the closing file is built on it.
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