FIRPTA withholding

Name: MILDRID ESUA, CPA, PLLC
Price range: $

Tax on the Sale of U.S. Real Estate by Foreign Sellers

Are you a nonresident planning to sell a U.S. home, vacation property, or rental property? If so, it is essential to understand FIRPTA withholding to avoid unexpected cash flow issues at closing.

What is FIRPTA?

FIRPTA (Foreign Investment in Real Property Tax Act) requires that tax be withheld when a foreign person sells U.S. real estate. For many nonresidents, this requirement only becomes apparent when listing a property or entering into a sales contract.

Under FIRPTA rules, the buyer (or withholding agent) must generally withhold 10% to 15% of the total sales price—not just the profit.

Why This Matters

This withholding applies regardless of whether you made a gain or a loss on the sale.

Example:
If you sell a property for $1,000,000, the IRS may require $150,000 to be withheld at closing. These funds are sent directly to the IRS and can be held for several months—even when little or no tax is ultimately owed.

What Happens to Your Money?

The withheld amount is submitted to the IRS at closing. To recover any excess:

You must file a U.S. income tax return for the year of sale

Report the actual gain or loss

Request a refund for any overpayment

This process can delay access to your funds until the following year.

Do You Have Options?

Yes. You are not always required to wait for a refund. Depending on your circumstances, you may be able to:

Reduce the withholding amount based on estimated tax liability

Eliminate withholding under certain exemptions

Apply for an IRS withholding certificate before closing

Each option requires timely action and proper documentation.

How We Can Help

At Mildrid Esua, CPA, PLLC, we help nonresident property sellers:

Assess FIRPTA exposure early in the process

Prepare and file Form 8288-B (withholding certificate applications)

Coordinate with closing agents to ensure compliance

Minimize delays and avoid unnecessary withholding

File your U.S. tax return and secure any refund due

We help G-4 visa holders and other nonresidents who are selling property by:

Preparing the proper forms (Form 8288-B, Application for Withholding Certificate), before closing, to reduce or eliminate this withholding requirement
Preparing supporting documents and calculations for the Form 8288-B, to show the actual expected tax on the sale
Helping explain to real estate professionals the steps they should follow to help their nonresident sellers obtain reduced withholding
Filing Forms 843 and 8288-B to request an early refund of the withholding
Filing income tax returns (Form 1040NR) for the year of the sale to properly report the sale—and to report the withholdings or request the refund

📞 Need Guidance?

If you are a nonresident selling U.S. real estate, contact us early to ensure a smooth, compliant, and tax-efficient transaction.

To schedule an appointment with a nationally recognized, best accountant FREE CPA consultation. or Call 336 825 7994