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.
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.