The 15% withholding
is negotiable.
Most sellers don't know.

FIRPTA — the Foreign Investment in Real Property Tax Act — requires the buyer of U.S. real estate to withhold 15% of the gross sales price when the seller is a foreign person. The IRS uses that withholding as a deposit against the seller's eventual U.S. tax on the gain.

The trap: 15% of the gross price is almost always far more than the actual tax owed. Without intervention, that excess sits with the IRS for a year or more before it can be refunded.

By filing IRS Form 8288-B, the Application for Withholding Certificate. The form asks the IRS to authorize a reduced withholding amount equal to the actual expected tax on the gain. While the application is pending, the funds are held in escrow rather than wired to the IRS.

The earlier we file — ideally 30 to 90 days before closing — the better the result.

The buyer is the statutory withholding agent and is personally liable if the proper amount isn't withheld and remitted. In most transactions the closing or title agent performs the mechanics — but the legal exposure remains with the buyer until the filing is clean.

Yes. Common exceptions include: sales of personal residences under $300,000 to a buyer who will occupy the property; sales between $300,001 and $1,000,000 to a residence-buyer (10% withholding instead of 15%); the seller providing a non-foreign affidavit (FIRPTA Certificate of Non-Foreign Status); and properly issued IRS withholding certificates.

Each exception has documentation requirements. We confirm eligibility in writing before relying on any of them.

Forms 8288 and 8288-A — together with the withheld tax — must be received by the IRS within 20 days of closing. The single exception: a Form 8288-B Withholding Certificate application has been filed before closing. In that case the funds stay in escrow until the IRS rules on the application.

Yes. A U.S. taxpayer identification number (ITIN) is required for the seller to file Form 8288-B and to claim the withholding credit on the eventual U.S. tax return. We coordinate the ITIN application — typically Form W-7 — in parallel with the FIRPTA filings.

Engagement fees depend on transaction size, entity structure, ITIN status, and whether we're preparing a Form 8288-B Withholding Certificate or only handling the buyer-side 8288/8288-A. Most engagements are flat fee. We quote in writing after a no-charge intake call.

Tell us immediately. Every FIRPTA filing — Form 8288, the 8288-B if pending, and the 20-day remittance window — is anchored to the closing date. The IRS scrutinizes postmarks. If your closing slips by even a few days and we aren't told, late-filing penalties of up to 25% can attach to the buyer. A schedule change is rarely a problem when we know about it; it's only a problem when we don't.

The IRS issued a mandate requiring all FIRPTA withholding to be remitted electronically via EFTPS. The mandate has been postponed; the new effective date has not been announced. Paper checks may still be accepted in the interim, but buyers should enroll in EFTPS now — enrollment requires a valid U.S. Tax ID and a U.S. mailing address for the PIN, with 7–10 business days lead time. Once the mandate takes effect, paper checks will be rejected.

Section 899, enacted in the One Big Beautiful Bill Act, lets the IRS apply a surcharge to FIRPTA gain — starting at 5 percentage points above the standard rate and rising up to 20 percentage points — for sellers from countries the U.S. has classified as imposing 'unfair' foreign taxes on U.S. persons (UTPRs, digital services taxes, or diverted-profits taxes). If your country is on the list, your actual U.S. tax on the gain may be materially higher. We confirm country status at intake. Countries that repeal the offending tax come off the list prospectively.

A new 1% federal excise tax (IRC §4475) on outbound transfers of funds from the U.S. took effect January 1, 2026, under the One Big Beautiful Bill Act. It applies to wire transfers and similar remittance services that send money outside the U.S. — and it's in addition to FIRPTA withholding, not a credit against it. Transfers funded by U.S.-issued debit or credit cards are excluded. Foreign sellers repatriating sale proceeds or refunds should plan for the additional 1% on the outbound transfer.

Often, yes — FIRPTA is the federal layer, but several states levy their own nonresident-seller withholding on top. Common examples: California 3.33% of sale price, Hawaii 7.25%, Colorado 2%, New Jersey 2%–10.75%, Georgia 3%. Rates and rules vary by state and seller residency status. Confirm with your closing agent whether state withholding applies to your sale; we can coordinate with your state-side preparer.

Special FIRPTA rules apply. Withholding is generally required on each installment payment as it is received — not just at closing — and the buyer must file a separate Form 8288 for each payment. If your transaction includes seller financing or installment payments, tell us up front so we can scope the engagement properly and ensure each payment is reported and remitted on time.