Why 15% of the price (not the profit) hurts
FIRPTA withholds on the amount realized β the gross sale price β regardless of whether you made a profit. Sell a $1M property and $150,000 is wired to the IRS at closing, even if your actual gain (and tax) is far smaller, or even if you sold at a loss.
That's because FIRPTA is a collection mechanism, not the tax itself. The IRS wants the cash in hand before a foreign seller leaves the country. Your real tax is the capital gains tax on your gain β typically much less than 15% of the whole price.
The gap between the two is your refund β but you only get it back by filing a US return, months later. That lag is the core problem this area of planning solves.
The three rates, and how to get a lower one
0% β buyer will use it as a residence AND price is $300,000 or less.
10% β buyer will use it as a residence AND price is $300,001β$1,000,000.
15% β everything else: commercial/investment property, or any sale over $1,000,000.
Beyond these, the most powerful tool is the withholding certificate (Form 8288-B): file it before or at closing and the IRS can authorize withholding equal to your actual expected tax instead of 15% of the gross β so your cash isn't locked up for months. It must be filed correctly and on time, which is where a specialist earns their fee.
The buyer is on the hook β why that matters to you
The buyer is the withholding agent and is personally liable to the IRS if they don't withhold and remit correctly (Forms 8288 / 8288-A within 20 days). That's why buyers and their title companies are strict about it.
For you as the seller, that means the deal can stall if FIRPTA isn't handled cleanly β and the residence-rate exceptions depend on the buyer's cooperation (their affidavit of intended use). Getting the paperwork right early keeps the closing on track and your money moving.
How to file: forms, the 20-day deadline & your refund (2026)
FIRPTA has two paths: let the buyer withhold and reclaim the excess later, or reduce the withholding up front with a certificate. Either way, an ITIN is the piece foreign sellers most often forget β without it, no refund.
Key forms & deadlines
| Form / Step | When |
|---|---|
| Form 8288-B (reduce withholding) β optional | β₯ 90 days before closing |
| Form W-7 (ITIN) if needed | Before filing |
| Buyer files Form 8288 / 8288-A | Within 20 days of closing |
| Form 1040-NR (claim refund) | Sale-year tax return |
There is no government filing fee for these forms. The "cost" is the cash withheld and the months it takes to recover any excess.
Why the ITIN and 8288-B matter most
Two things decide whether your money is tied up for months: getting an ITIN early (no stamped 8288-A, no refund) and, where the tax will be far below 15%, filing Form 8288-B before closing to cut the withholding at source. The January 2026 Form 8288 revision also added sections for partnership-interest transfers under Β§1446(f).
Documents to prepare
- Closing statement showing the gross sale price (amount realized).
- Cost-basis records: purchase price plus capital improvements.
- Buyer's residential-use affidavit if claiming the 0%/10% rate.
- ITIN (or Form W-7) and the IRS-stamped Copy B of Form 8288-A.
Frequently asked questions
Q. I sold at a loss β do I still get withheld?
A. Yes, withholding is on the gross price regardless of gain or loss β but you'd reclaim essentially all of it by filing, or avoid it up front with a withholding certificate showing no tax due.
Q. How long does the refund take?
A. Filing Form 1040-NR after the sale, refunds commonly take several months to process β one reason the 8288-B certificate route is popular.
Q. Does FIRPTA apply if I'm a US green card holder?
A. No β FIRPTA targets foreign persons (nonresident aliens, foreign entities). A resident alien (e.g. green card holder) generally isn't subject to FIRPTA withholding on their sale.
FIRPTA withholding checklist (save your progress)
Tick each item as you prepare it. Progress is saved in this browser β nothing is uploaded. This is a preparation aid, not tax advice.
Sources and official references: IRS β FIRPTA Withholding (IRC Β§1445); IRS β Instructions for Forms 8288 / 8288-A; Form 8288-B (withholding certificate), Form W-7 (ITIN). Standard 15% withholding under the PATH Act; reduced residence rates apply at the $300,000 (0%) and $1,000,000 (10%) buyer-use thresholds; the buyer generally must report and pay within 20 days of transfer. This is an independent self-assessment tool, not tax or legal advice; the buyer's-use exceptions, withholding certificates and actual capital gains tax are fact-specific. Consult a licensed cross-border real-estate tax professional. See also our NRA estate tax, SPT and FBAR/8938 tools.