Selling your Texas home from another country

In most cases the buyer is the withholding agent, and the IRS can hold the buyer liable for the tax if they fail to withhold from a foreign seller. That is why buyers, lenders and title companies take it seriously and why you will be asked about your tax status early.

It is generally the sales price: the cash paid, the fair market value of any other property transferred, and any debt the buyer takes over. Withholding is calculated on that figure, not on your profit. On a $350,000 sale at 15%, the amount held back would be $52,500, even if your actual tax ends up far lower.

If the price is $300,000 or less and the buyer is an individual who, with family, plans to live in the home at least 50% of the days it is used in each of the first two 12-month periods, withholding generally does not apply. If the total price is over $300,000, the exception is lost even when each co-owner's share is smaller.

If the standard withholding would be more than you will actually owe, you or the buyer can ask the IRS for a certificate that reduces or eliminates it. The buyer must still withhold at closing while the application is pending, but does not have to send the money to the IRS until the 20th day after the IRS mails its decision.

To get credit for the withholding you need a U.S. taxpayer number. A seller without a Social Security number applies for an ITIN on Form W-7. The IRS says it will deny an ITIN request filed before a binding sales contract exists unless there is another valid reason; once you have a contract, the W-7 can go in together with Form 8288-B.

The buyer files Forms 8288 and 8288-A. The IRS stamps a copy of 8288-A for you, and you attach it to a U.S. income tax return to claim credit for what was withheld.

You can sign the closing documents yourself in front of an authorized official, or give a trusted person in Texas a durable power of attorney to sign for you. Under Texas Estates Code 751.0021, a durable power of attorney must be signed by the principal and acknowledged before an officer authorized to take acknowledgments.

Texas Civil Practice and Remedies Code 121.001 allows an acknowledgment taken outside the United States by a U.S. consul or consular agent, or by a notary public or other official authorized to administer oaths in that country. That includes a Mexican notario publico.

Mexico has been a party to the Hague Apostille Convention since August 14, 1995, and the United States since October 15, 1981. An apostille authenticates the notary's signature and replaces the older chain of consular legalization. Ask the title company in writing whether it wants one and whether it needs an English translation.

Texas commissions online notaries. The Texas Secretary of State says the online notary must be physically in Texas while the signer may be located anywhere, using two-way audio and video, identity proofing, and a recording kept for five years. Whether a title company and its underwriter accept it for your deed is their call, so confirm early.

When an agent signs a deed under a durable power of attorney, Texas Estates Code 751.151 requires the power of attorney to be recorded with the county clerk where the property sits no later than the 30th day after the deed is filed. Send the original to the title company well ahead of closing.