The owner lives in Bogotá or Madrid and wants to sell the Miami condo. Or your buyer's dream house belongs to someone who lives abroad. Either way, a federal rule called FIRPTA is now part of your deal, and it can take a large piece of the seller's proceeds at closing.
You do not file the forms; the closing agent and the tax advisers do. But you are usually the first person who can spot that FIRPTA applies, and the one the seller calls when the wire is smaller than expected. This guide covers who withholds, the rates, the exemptions, the forms and deadlines, and what to do at each step.
This is not tax or legal advice. FIRPTA has more exceptions than fit in one post. Bring in a CPA or tax attorney who handles international clients, and the title or escrow company, as soon as you know the seller may be a foreign person. Every figure below links to the IRS or the statute, checked on October 27, 2026.
What FIRPTA is
The Foreign Investment in Real Property Tax Act of 1980 lets the US tax foreign persons when they sell, or otherwise dispose of, US real estate. To make sure the tax gets paid, the law requires the buyer to withhold part of the price and send it to the IRS.
Three terms come up again and again:
- Foreign person. A nonresident alien individual, or a foreign corporation, partnership, trust or estate. A resident alien individual is not a foreign person. For individuals, the question is US tax status, not simply where the seller lives.
- Transferee. The buyer, foreign or domestic. The buyer is the withholding agent.
- Amount realized. Roughly, the sales price: the cash paid or to be paid, the fair market value of other property transferred, and any of the seller's liabilities the buyer assumes. The withholding is a percentage of this number, not of the seller's profit.
That surprises sellers most: even with a small gain, 15% of the gross price can be withheld unless an exception or a withholding certificate applies.
Who withholds, and who is on the hook
The IRS is direct about it: "The transferee must find out if the transferor is a foreign person." If the seller is foreign and the buyer does not withhold, the buyer may be held liable for the tax. The Form 8288 instructions add that the tax, including interest, may be collected from the person who should have withheld.
In practice, the closing agent usually holds back the amount from the seller's proceeds and handles the filing. But the legal duty sits with the buyer, so buyer's agents should care as much as listing agents.
Agents have their own exposure. Under 26 U.S. Code § 1445(d), if the seller's agent or the buyer's agent knows that a seller's non-foreign affidavit is false, they must notify the buyer. An agent who fails to do so takes on the withholding liability, limited to the compensation they earn from the deal. The same rule applies to the person closing the transaction.
FIRPTA withholding rates and the residence exemption
The general FIRPTA withholding rate is 15% of the amount realized. There are two reduced cases, both tied to the buyer planning to live in the property:
| Sales price (amount realized) | Buyer acquires it as a residence? | FIRPTA withholding |
|---|---|---|
| $300,000 or less | Yes | 0% (exempt) |
| $300,000 or less | No | 15% |
| Over $300,000, up to $1,000,000 | Yes | 10% |
| Over $300,000, up to $1,000,000 | No | 15% |
| Over $1,000,000 | Either | 15% |
Sources: IRS, Exceptions from FIRPTA withholding, Instructions for Form 8288, 26 U.S. Code § 1445(b)(5) and (c)(4).
To put numbers on it: on an $800,000 sale, 15% is $120,000 and 10% is $80,000. That is money the seller does not receive at closing.
The residence test is strict:
- For the $300,000 exemption, the buyer must be an individual, and the buyer or a family member must have definite plans to live in the property for at least 50% of the days it is used during each of the first two 12-month periods after the sale. Days the property sits vacant are not counted.
- The IRS FAQ applies the same residence test to the reduced 10% rate, and warns that a buyer who claimed the exception and then does not live there for the required time can be liable, unless the change came from circumstances that could not reasonably have been anticipated.
- If there are several sellers, the $300,000 limit applies to the total amount realized, not each seller's share.
An investor buying a rental from a foreign seller is in the 15% row, whatever the price.
The non-foreign seller affidavit and other FIRPTA exemptions
When the seller is not a foreign person, the usual way to show it is a certification of non-foreign status, often called the FIRPTA affidavit. The seller states, under penalties of perjury, that they are not a foreign person, and gives their name, US taxpayer identification number and home address. The closing party (other than the seller's agent) can hold the certification as a "qualified substitute" and give the buyer a sworn statement that it has it.
The IRS lists other exceptions too, including:
- The buyer receives a withholding certificate from the IRS that excuses withholding.
- The seller gives written notice that no gain or loss is recognized because of a nonrecognition provision of the tax code or a treaty.
- The amount the seller realizes is zero.
- The property is acquired by the United States, a state or possession, a political subdivision or the District of Columbia.
FIRPTA forms: 8288, 8288-A and 8288-B
Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. The buyer (through the closing agent) files Form 8288 and pays the tax withheld by the 20th day after the date of transfer. The date of transfer is generally the first date consideration is paid or a liability is assumed; an earnest money deposit subject to forfeiture generally does not count.
Form 8288-A, Statement of Withholding. Filed with Form 8288. The IRS stamps Copy B and forwards it to the seller, who generally attaches it to a US income tax return, for example Form 1040-NR, to get credit for the amount withheld. If the seller's taxpayer identification number is missing, no stamped copy is sent, and the seller has to prove the withholding with closing documents instead.
Form 8288-B, Application for Withholding Certificate. This is how a seller asks the IRS to reduce or eliminate withholding, for example when 15% of the price would be more than the seller's maximum tax on the sale. The buyer, the buyer's agent or the seller may apply. Key details:
- The IRS generally acts within 90 days after receiving a complete application.
- The application needs the taxpayer identification numbers of all parties. A seller without one can attach the Form 8288-B to a Form W-7 to apply for an ITIN.
- The seller must notify the buyer in writing that they applied, on the day of the transfer or the day before.
- The buyer still withholds at closing even with an application pending. What changes is the deadline: Form 8288 and the payment are due by the 20th day after the IRS mails the certificate or a denial notice.
What the agent should do, and when
Think of FIRPTA as something you spot at the first conversation, not at the closing table.
- At the first call: ask where the seller lives and whether they are a US citizen or US tax resident. If the answer is "I live abroad" or "I'm not sure", treat FIRPTA as likely.
- Before you sign the listing: tell the seller, in plain words, that up to 15% of the price may be held back at closing, and that a CPA can tell them whether a withholding certificate makes sense. Since processing generally takes about 90 days, this conversation cannot wait for the contract.
- When you open title or escrow: tell the closing agent the seller may be a foreign person. Ask what they need from the seller and by when.
- When the buyer's offer comes in: check the price and the buyer's intended use against the table above. If the buyer plans to claim the residence exception, make sure they understand the 50% test.
- Before closing: confirm whether a Form 8288-B application was filed and how the withheld amount will be handled.
- After closing: remind the seller that the withheld money is credited through a US tax return, and that they need a taxpayer identification number for the stamped Form 8288-A. Put them back in touch with their CPA.
These questions often arrive on WhatsApp, in Spanish. A good answer is short, accurate, and hands the details to the professionals:
- Hola, mi contador dice que si vendo el apartamento en Miami me van a retener dinero. ¿Es cierto?Hi, my accountant says that if I sell the apartment in Miami they'll hold back money. Is that true?
- Sí, es probable. Se llama FIRPTA. Cuando el vendedor no es residente fiscal en EE. UU., el comprador debe retener una parte del precio de venta y enviarla al IRS. Normalmente es el 15% del precio, no de la ganancia.Yes, probably. It's called FIRPTA. When the seller isn't a US tax resident, the buyer has to hold back part of the sale price and send it to the IRS. It's usually 15% of the price, not of the profit.
- ¿15%? ¿Y ese dinero lo pierdo?15%? And do I lose that money?
- No necesariamente. Es un anticipo del impuesto. Se acredita cuando presentas una declaración en EE. UU., y a veces se puede pedir al IRS que reduzca la retención antes del cierre. Eso lo decide un contador de impuestos en EE. UU. ¿Quieres que te presente a uno con el que trabajamos?Not necessarily. It's a prepayment of the tax. It's credited when you file a US return, and sometimes you can ask the IRS to reduce the withholding before closing. A US tax accountant decides that. Want me to introduce you to one we work with?
The agent does not guess the final tax, promise a refund or pick an exception. That is the CPA's job.
Common FIRPTA mistakes
- Finding out at closing. The seller has no time to talk to a CPA, consider a withholding certificate, or plan for a smaller wire.
- Guessing tax status from a passport or an address. A non-US citizen can be a resident alien, who is not a foreign person. Let the tax adviser decide, not the listing paperwork.
- Calling it "the 15% tax". It is withholding on the gross price. The seller's actual tax is worked out on their US return.
- Claiming the residence exception casually. The buyer must plan to live there under the 50% test, and can be liable if they do not.
- Adding up wrong with several sellers. The $300,000 exemption looks at the total amount realized.
- Forgetting the ITIN. Without a taxpayer identification number, the seller does not get the stamped Form 8288-A.
- Assuming FIRPTA is the only withholding. This post covers the federal rule. Ask the closing agent whether your state has its own requirements.
Tax questions from international clients usually reach you long before the closing agent sees the file. Our guide to answering click-to-WhatsApp ad leads covers how to route questions like these to the right person.
Where Replint fits
Replint is an AI assistant that answers WhatsApp leads in seconds, in English or Spanish, and qualifies them with one question at a time. In its smart auto mode it does not answer tax or legal questions itself: when a lead asks something like "will they withhold money if I sell?", Replint turns it into a draft for you with an alert, so you can reply yourself or bring in the CPA. It is in early access for US agents and teams.
