I had a question yesterday from a real estate broker about the Federal 10% withholding tax on sale of a residence. This is a frequent question, thus should be a topic for the FAQ.

Let's start at the top. When foreigners sell U.S. real estate, there is a 10% Federal tax withheld. The 10% is calculated based on the sales price.

Foreigners often think this 10% withholding is the only U.S. tax liability the face. That is a reasonable assumption. On dividends payments to foreigners, for instance, U.S. companies withhold a certain amount (somewhere between zero and 30%, depending on the country) for tax, remit the balance to the foreign recpient, and that's it