Selling U.S. real estate as a nonresident foreign individual or entity? You may be subject to FIRPTA withholding, a mandatory tax withholding that can significantly impact your cash flow at closing.
At Cao & Associates, CPA, we specialize in helping foreign sellers navigate the FIRPTA process, minimize delays, and claim their refunds efficiently. Here’s what you need to know.
📘 What Is FIRPTA?
FIRPTA stands for the Foreign Investment in Real Property Tax Act. Under FIRPTA, when a foreign person sells U.S. real estate, the IRS requires the buyer to withhold up to 15% of the gross sale price and send it to the IRS as a prepayment of the seller’s potential U.S. tax liability.
This applies to:
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Individuals who are not U.S. citizens or residents
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Foreign corporations, trusts, or partnerships
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Sellers of rental properties, second homes, or investment real estate
💰 How Much Will Be Withheld?
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15% of the total sale price is typically withheld
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For example, on a $1,000,000 sale, $150,000 may be withheld at closing
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This amount is sent directly to the IRS—not to the seller
The actual tax owed may be less than the withholding, and you may be eligible for a partial or full refund, depending on your tax situation.
📝 How to Reduce or Avoid FIRPTA Withholding
You may be able to reduce or avoid the full 15% withholding by:
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Applying for a FIRPTA Withholding Certificate (Form 8288-B) before the closing
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Qualifying for exemptions, such as when the buyer will use the property as a residence and the sale price is under $300,000
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Working with a CPA to determine your estimated capital gains tax, which may be much lower than 15%
Note: The IRS must approve your withholding certificate before closing to pause the withholding. Timing is critical!
✅ How We Help Foreign Sellers
At Cao & Associates, CPA, we provide start-to-finish FIRPTA services for international property owners:
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Determine your FIRPTA obligations
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Prepare and submit Form 8288-B for reduced withholding
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Assist with Form 8288 & 8288-A processing
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Prepare and file your U.S. tax return (Form 1040-NR or 1120-F)
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Help you recover your FIRPTA withholding with IRS refund tracking
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Assist with ITIN application if you do not yet have a U.S. tax ID
We speak both English and 中文 and have helped dozens of foreign investors successfully sell and reclaim their FIRPTA withholdings.
📞 Contact Us Before You List or Sell
If you are planning to sell U.S. property and are not a U.S. citizen or resident, don’t wait. FIRPTA compliance starts early—and the right tax planning can save you time and money.
📧 Email: info@caoandassociates.net
📱 Call or Text: 425-230-7538 / 425-336-8675
🌐 Bilingual Services: English & 中文
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