What is the FIRPTA withholding rate?

The standard FIRPTA withholding rate is 15% of the gross sales price. For properties sold for $300,000 or less that the buyer will use as a primary residence, the rate is 10%. If the sales price exceeds $1 million, the rate is 15%. These rates apply to the gross price, not the profit. For a $500,000 sale, the buyer withholds $75,000 (15%).

Do I need an ITIN to sell US real estate as a foreign person?

Yes. You need an ITIN to file Form 1040-NR reporting the sale and to claim any refund of over-withheld FIRPTA tax. Without an ITIN, the IRS withholds 15% and you cannot file to reclaim the excess. Apply for an ITIN before the sale closes or use a CAA to process your application simultaneously with the transaction.

Can I reduce FIRPTA withholding below 15%?

Yes, through a withholding certificate (Form 8288-B). File Form 8288-B with the IRS before closing to request reduced withholding based on your estimated tax liability. If your actual capital gains tax is less than 15% of the sales price, the IRS may approve a reduced rate. Processing takes 90 days, so apply well before your anticipated closing date.

How do I get a FIRPTA refund?

File Form 1040-NR for the tax year of the sale. Report the capital gain on Schedule D and Form 8949. Enter the FIRPTA withholding (from Form 8288-A) as tax paid. If your actual tax liability is less than the 15% withheld, the IRS refunds the difference. Paper-filed returns take 8 to 16 weeks for refund processing.

What forms are used for FIRPTA?

The buyer files Form 8288 (reporting the withholding) and Form 8288-A (statement for the seller showing amount withheld) within 20 days of closing. The seller uses Form 8288-A to claim the withholding credit on their Form 1040-NR. For reduced withholding, the seller files Form 8288-B before closing.

Does FIRPTA apply to rental property?

FIRPTA applies to any US real property interest (USRPI), including rental property, commercial property, vacant land, and condos. The sale of any US real property by a foreign person triggers FIRPTA withholding at 15% of the gross sales price. Ongoing rental income is not subject to FIRPTA but is taxed separately on Form 1040-NR.

What if the buyer does not withhold under FIRPTA?

If the buyer fails to withhold, the buyer becomes liable for the tax plus penalties and interest. The IRS can collect the withholding amount from the buyer directly. Buyers who knowingly fail to withhold face penalties of up to 100% of the required withholding amount. Title companies and real estate attorneys typically ensure FIRPTA compliance at closing.

Does FIRPTA apply to US citizens selling to foreign buyers?

No. FIRPTA applies only to foreign sellers, not foreign buyers. If a US citizen or resident sells property to a foreign buyer, no FIRPTA withholding occurs. FIRPTA is triggered by the seller's foreign status, not the buyer's. The buyer withholds from the seller's proceeds because the seller is a foreign person.

Can a foreign person be exempt from FIRPTA?

FIRPTA exemptions exist in 3 situations: (1) the property sells for $300,000 or less and the buyer will use it as a primary residence (10% rate applies, not 0%), (2) the seller obtains a qualifying statement from the IRS confirming no tax is due, or (3) the property is stock in a domestically controlled REIT. Most individual foreign sellers cannot fully avoid FIRPTA withholding.

Updated April 2026

FIRPTA and ITIN Guide 2026: Foreign Real Estate Tax Withholding

FIRPTA (Foreign Investment in Real Property Tax Act) requires 15% withholding on the gross sales price when a foreign person sells US real estate. On a $500,000 property sale, $75,000 is withheld and sent to the IRS before you see any proceeds. Your ITIN is essential to file Form 1040-NR and reclaim any over-withheld amount. Many foreign sellers owe less than 15% in actual capital gains tax, making the FIRPTA refund process critical. This guide covers how FIRPTA works, how to reduce withholding, how to file for a refund, and the role your ITIN plays in every step.

What Is FIRPTA and How Does It Affect Foreign Property Owners?

FIRPTA is a US federal law enacted in 1980 under IRC Section 897. It ensures that foreign persons pay US capital gains tax when they sell US real property. Without FIRPTA, foreign sellers could sell US property, leave the country, and never pay tax on the gain.

FIRPTA works through mandatory withholding at the time of sale. The buyer (or the buyer's agent) withholds a percentage of the gross sales price and submits it to the IRS using Form 8288. This withholding is not a tax itself — it is a prepayment toward your actual tax liability, which you determine when you file Form 1040-NR.

FIRPTA Withholding Rates

Situation	Rate	Example ($500K Sale)
Standard sale	15%	$75,000 withheld
Buyer's residence, price $300K-$1M	15%	$75,000 withheld
Buyer's residence, price $0-$300K	0%	$0 withheld
With withholding certificate (8288-B)	Reduced (varies)	Based on actual tax

Why Do You Need an ITIN for FIRPTA?

Your ITIN is required at 4 stages of the FIRPTA process:

Form 8288-B (withholding certificate application). Your ITIN is entered on this form to request reduced withholding before closing. Without an ITIN, the IRS cannot process your application.
Form 8288-A (withholding statement). The buyer files this with your ITIN to report the amount withheld. You need the copy with your ITIN to claim the withholding credit.
Form 1040-NR (tax return). You enter your ITIN on your annual tax return to report the sale and claim a refund of any over-withheld amount.
State tax returns. Many states impose their own withholding on foreign sellers. Your ITIN is required on state forms as well.

If you do not have an ITIN when selling US property, apply immediately. The ITIN application process takes 7 to 11 weeks. Plan ahead by applying months before your anticipated sale date.

How Do You Reduce FIRPTA Withholding with Form 8288-B?

If your actual capital gains tax is less than 15% of the sales price, you can apply for a withholding certificate to reduce the amount withheld at closing.

Calculate your estimated tax liability. Determine your capital gain (sales price minus adjusted basis). Apply the applicable capital gains rate (15% or 20% for long-term gains).
File Form 8288-B with the IRS. Submit the application with your ITIN, property details, sales price, adjusted basis, and estimated tax. File as early as possible — processing takes approximately 90 days.
Receive the withholding certificate. The IRS issues a certificate specifying the reduced withholding amount. Provide this to the buyer and closing agent.
Close with reduced withholding. The buyer withholds the IRS-approved amount instead of the full 15%.

Example savings:

You sell a property for $400,000. You purchased it for $350,000. Your capital gain is $50,000. At 15% capital gains rate, your tax is $7,500. Without Form 8288-B, $60,000 is withheld (15% of $400,000). With the withholding certificate, only $7,500 is withheld. You keep $52,500 more at closing.

How Do You Get a FIRPTA Refund?

If the 15% FIRPTA withholding exceeds your actual capital gains tax, file for a refund on Form 1040-NR. Follow these 5 steps.

Obtain Form 8288-A from the buyer. This form shows the amount withheld and sent to the IRS. You need Copy B for your records.
Calculate your actual capital gain. Sales price minus adjusted basis (purchase price + closing costs + improvements - depreciation). Long-term gains (held over 1 year) are taxed at 15% or 20%.
File Form 1040-NR. Report the sale on Schedule D and Form 8949. Enter the FIRPTA withholding as tax paid.
Attach Form 8288-A. Include your copy showing the withholding amount.
Request direct deposit. Provide your US bank account routing and account numbers. Refunds take 8 to 16 weeks for paper-filed FIRPTA returns.

Do States Have Their Own FIRPTA Withholding?

Yes. Many states impose additional withholding on real estate sales by non-residents (both foreign and out-of-state sellers). State rates are separate from and in addition to the federal 15% FIRPTA withholding.

California: 3.33% of gross sales price
Hawaii: 7.25% of gross sales price
Maryland: 8% of gain
Oregon: 4% of gain or 2% of gross price
Georgia: 3% of gross sales price
New York: Varies by gain and residency

Combined federal and state withholding can exceed 20% of the gross sales price. Plan your sale timeline and cash flow accordingly. States with no income tax (Florida, Texas, Nevada, Wyoming) do not impose additional withholding.

What Is the FIRPTA Timeline for ITIN Holders?

The complete FIRPTA process spans several months. Plan these milestones carefully.

Step	Timeline	Action
6+ months before sale	7-11 weeks	Apply for ITIN (Form W-7) if needed
3+ months before closing	~90 days	File Form 8288-B for reduced withholding
At closing	Same day	Buyer withholds 15% (or reduced rate)
Within 20 days of closing	20 days	Buyer files Form 8288 and 8288-A
By April 15 or June 15	Tax deadline	File Form 1040-NR with capital gain
After filing	8-16 weeks	Receive refund of over-withheld amount

Frequently Asked Questions About FIRPTA and ITIN

FIRPTA is the Foreign Investment in Real Property Tax Act, enacted in 1980 under IRC Section 897. It requires buyers of US real property from foreign sellers to withhold 15% of the gross sales price and remit it to the IRS. FIRPTA ensures foreign persons pay US capital gains tax on real estate profits. The withholding acts as a prepayment of tax, not the final tax itself.

Need an ITIN before selling US real estate? Apply early through our CAA service starting at $297.

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