State Nonresident Withholding on FIRPTA Transactions: California, Hawaii, Colorado, NJ, Georgia Compared

FIRPTA is the federal layer, but several states levy their own nonresident-seller withholding on top. A side-by-side look at what foreign sellers face in CA, HI, CO, NJ, and GA.

FIRPTA is a federal withholding mechanism — but several states layer their own nonresident-seller withholding rules on top. For a foreign seller closing in California, Hawaii, Colorado, New Jersey, or Georgia, the actual cash withheld at closing can substantially exceed the 15% federal FIRPTA rate.

This post walks through the state withholding rules in the five jurisdictions where they matter most, with examples.

California — 3.33% of sale price

California Revenue and Taxation Code § 18662 requires withholding on nonresident sellers of California real estate. The default rate is 3.33% of the total sale price, withheld by the buyer or their agent at closing.

Like the federal FIRPTA, California allows a seller-elected alternative: 9.3% of the gain instead of 3.33% of the gross. For a foreign seller with substantial appreciation, the gain-based calculation often produces a smaller withholding number — but the documentation requirements are stricter.

California also offers a Withholding Certificate option (similar to Form 8288-B at the federal level) — Form 593, the Real Estate Withholding Statement. Foreign sellers can apply to reduce California withholding below 3.33% if their actual California tax liability on the gain will be lower.

Combined with FIRPTA: a foreign seller closing a $1M property in California faces $150,000 federal FIRPTA + $33,300 California state = $183,300 withheld at closing.

Hawaii — 7.25% of sale price

Hawaii's HARPTA (Hawaii Real Property Tax Act) is the steepest of the major state rules. Nonresident sellers face 7.25% withholding on the gross sale price, withheld at closing.

Hawaii allows reduction to 4% via Form N-289 (Certification for Exemption from the Withholding of Tax on the Disposition of Hawaii Real Property) for various exempt circumstances, and full Withholding Certificates analogous to FIRPTA via Form N-288A.

Hawaii is unusual in that state and federal withholding are not coordinated. The state tax is a separate calculation from the federal FIRPTA tax, with separate filings and refund procedures.

Combined with FIRPTA: a foreign seller closing a $1M Hawaii property faces $150,000 federal + $72,500 state = $222,500 withheld at closing — 22.25% of the gross.

Colorado — 2% of sale price

Colorado's nonresident withholding is more modest. The rate is 2% of the sale price for sellers who don't qualify as Colorado residents, with the buyer or settlement agent withholding at closing.

Several exceptions reduce or eliminate the withholding, including sales below $100,000 and sellers who provide a Colorado tax certificate of compliance.

Combined with FIRPTA: a foreign seller closing a $1M Colorado property faces $150,000 federal + $20,000 state = $170,000 withheld.

New Jersey — 2% to 10.75% of gain

New Jersey's nonresident withholding is unusual: it's 2% to 10.75% of the gain, not the gross sale price. The rate scales with the seller's expected New Jersey tax bracket on the gain.

For a foreign seller with substantial gain, this can be the largest state withholding item. A $500,000 gain on a New Jersey property could face withholding of $10,000 to $53,750 depending on the bracket.

Form GIT/REP-3 establishes nonresident status and triggers the withholding. Form GIT/REP-1 is the Withholding Certificate equivalent for sellers seeking reduced withholding.

Combined with FIRPTA: a foreign seller with a $500,000 gain on a $1M New Jersey property at the 10.75% rate faces $150,000 federal + $53,750 state = $203,750 withheld.

Georgia — 3% of sale price

Georgia's nonresident withholding rate is 3% of the sale price on sales by nonresident sellers above $20,000. The withholding is collected by the buyer or settlement agent at closing.

Georgia provides multiple exceptions and reduction mechanisms via Form NRW-Exemption — including a gain-based reduction analogous to California's optional method.

Combined with FIRPTA: a foreign seller closing a $1M Georgia property faces $150,000 federal + $30,000 state = $180,000 withheld.

Other states

Many other states have nonresident withholding rules, often more limited or only triggered above specific sale-price thresholds. Notable mentions:

• New York: nonresident estimated income tax on real property gains, calculated case-by-case
• Vermont: 2.5% of sale price
• Maryland: 8% of gain or 7.5% of net proceeds for nonresident individuals; 8.25% for nonresident corporations
• Mississippi: 5% of gain
• South Carolina: 7% of gain

If your sale is in any state, confirm whether state withholding applies before closing. State Withholding Certificates (where available) can be filed in parallel with the federal Form 8288-B to align state and federal withholding to actual liability.

Practical takeaway

For a foreign seller in one of the high-rate states (Hawaii, New Jersey at higher brackets, California for high-gain transactions), the state withholding can rival or exceed the federal FIRPTA. Both layers need to be addressed at closing, both can be reduced via their respective Withholding Certificates, and both eventually reconcile via state and federal tax returns the year after closing.

We coordinate with state-side preparers in any of the 50 states. If your closing is in a high-rate jurisdiction, planning the state and federal pieces together — rather than as two separate problems — is what saves the most cash flow.