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FIRPTA Withholding for Foreign Sellers of US Property
Short answer: FIRPTA lets the US tax foreign persons on sales of US real property, and the buyer enforces it by withholding. The general rate is 15% of the amount realized. Two residence exceptions can lower or remove it. The foreign seller still files a US return.
Key takeaways
The buyer generally withholds 15% of the amount realized when the seller is a foreign person.
If an individual buyer will use the property as a residence, the rate drops or the withholding goes away, depending on price.
Forms 8288 and 8288-A are filed by the buyer. Form 8288-B is an application to reduce or eliminate withholding.
A foreign individual seller still files Form 1040-NR to report the sale and claim credit for the withholding.
The buyer must still withhold if a certificate application is pending on the transfer date.
What FIRPTA is
The Foreign Investment in Real Property Tax Act authorized the US to tax foreign persons on dispositions of US real property interests. It is enforced through withholding by the buyer, called the transferee or withholding agent. If the seller is foreign and the buyer fails to withhold, the IRS says the buyer may be held liable for the tax.
This page covers federal rules only, not state withholding.
The general rate: 15%
Generally, the buyer must withhold 15% of the amount realized. The amount realized is the sum of the cash paid or to be paid, the fair market value of other property transferred, and the liabilities the buyer assumes or that the property is subject to.
Two residence exceptions
Both depend on how the buyer will use the property. Both apply whatever the seller is. Neither applies if the actual buyer is not an individual.
10% rate. Withholding is a reduced 10% if the buyer acquires the property to use as a residence and the amount realized is $1 million or less.
No withholding. There is no withholding if one or more individuals acquire the property for use as a residence and the amount realized is $300,000 or less. The test uses the total amount realized, not each seller's share. If the total is above $300,000, the exemption does not apply even if each seller's share is $300,000 or less.
What "use as a residence" means. The buyer or a family member has definite plans to live there for at least 50% of the days the property is used by anyone, in each of the first two 12-month periods after the transfer. No form is filed with the IRS for this exception. If the buyer does not in fact use the property that way, the tax may be collected from the buyer.
The three forms
Form 8288 is the "U.S. Withholding Tax Return for Certain Dispositions by Foreign Persons." The buyer files it with the tax withheld, by the 20th day after the date of transfer.
Form 8288-A is the statement of withholding, completed for each person subject to withholding. The IRS stamps Copy B and sends it to the foreign seller.
Form 8288-B is the application for a withholding certificate. It is used to apply to reduce or eliminate withholding, and only for nonrecognition or exemption claims, maximum-tax-liability calculations, and certain installment-sale claims. Either the buyer or the seller can file it.
The IRS normally acts by the 90th day after a complete application. The buyer must still withhold even if an application was submitted on the transfer date, so timing matters.
The seller still files a US return
Form 8288-A itself tells the foreign seller it must file a US return, Form 1040-NR for an individual, to report the sale. You attach the stamped 8288-A to get credit for the tax withheld. The sale is reported in the year it actually occurred, even if the 8288-A shows a later date because of a certificate request.
A nonresident alien selling a US personal residence may qualify for the section 121 exclusion, up to $250,000 each, subject to the eligibility tests.
If you must have a US taxpayer ID for that return and cannot get a Social Security number, the IRS issues an ITIN. A new ITIN application generally includes your federal return, and the IRS says to apply on or before the return due date. See our ITIN guide.
A checklist for a foreign seller
Before you sign a contract. Find out whether the buyer is an individual who plans to live there, and the total price. Those facts decide the rate.
Decide on a certificate early. If an 8288-B ground fits, allow for the 90-day timeframe.
At closing. The buyer withholds.
Within 20 days after the transfer. The buyer files Forms 8288 and 8288-A.
When the stamped Copy B arrives. Keep it. It goes with your US return.
File your return. Form 1040-NR for the year of the sale, with an ITIN application if you need a number.
How we help
Sabih Shafi is an IRS Enrolled Agent, a federal license to represent taxpayers before the IRS in all 50 states. We work remotely, in English and Spanish, with foreign individuals and foreign owners of US companies.
We prepare the seller's Form 1040-NR to report the sale and claim credit for the withholding, and we help with the ITIN if you need one. Where your situation fits one of the three 8288-B grounds, we can help prepare that application. We prepare US returns only, not foreign returns. You can verify a preparer's credentials on the IRS directory.
Call or text (323) 900-0305, or book a free 20-minute review. If we take the work on, the fee is flat and quoted in writing before work starts.
General information, not tax advice for your situation.
Frequently Asked Questions
What is the FIRPTA withholding rate?
Generally 15% of the amount realized. A reduced 10% rate applies if the buyer acquires the property as a residence and the amount realized is $1 million or less.
When is there no FIRPTA withholding?
When one or more individuals acquire the property for use as a residence and the amount realized is $300,000 or less. The buyer must be an individual.
Who files Forms 8288 and 8288-A?
The buyer files Form 8288 with the tax by the 20th day after the transfer, with an 8288-A for each person subject to withholding.
Do I still file a US tax return after FIRPTA withholding?
Yes. The foreign seller must file a US return, Form 1040-NR for an individual, to report the sale. The stamped 8288-A is attached to get credit for the tax withheld.
Can I get the withholding reduced?
You may apply on Form 8288-B, but only for the three grounds above. The buyer must still withhold in the meantime.
Last reviewed: October 2026 by Sabih Shafi, EA
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This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 20-minute review or call or text us directly.
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