⚡ QUICK ANSWERFIRPTA withholds 15% of the gross sale price of US real estate when sold by a non-US person. On a $600,000 condo: $90,000 withheld. You recover most of it by filing Form 1040-NR. You need an ITIN to file Form 1040-NR. Get your ITIN before the sale closes — ITIN takes 7–11 weeks.
What Is FIRPTA?
The Foreign Investment in Real Property Tax Act (FIRPTA) was enacted in 1980 to ensure the US collects capital gains tax when foreign persons sell US real property. Under FIRPTA, the buyer of US real estate from a non-US seller is required to withhold 15% of the gross sales price at closing and remit it directly to the IRS.
The 15% withholding is not the tax itself — it's a prepayment. After you file your annual US tax return (Form 1040-NR), the IRS calculates your actual tax liability on the capital gain. If 15% withheld exceeds your actual tax on the gain, the IRS refunds the difference.
💡 Key insight: FIRPTA withholding is based on gross sale price, not your gain. If you bought for $400,000 and sell for $500,000, your gain is $100,000 — but FIRPTA withholds 15% × $500,000 = $75,000. Your actual capital gains tax might be $15,000-20,000. The difference ($55,000-60,000) is refunded when you file Form 1040-NR.
Who FIRPTA Affects
- Non-US persons selling US real estate — condos, houses, commercial property, land
- Non-US LLCs or companies selling US real estate they own
- Foreign investors in US real estate investment trusts (REITs) receiving certain distributions
FIRPTA applies regardless of your country of origin. It applies to treaty countries (Australia, UK, Germany, Canada, Mexico) and non-treaty countries (Nigeria, UAE, Brazil, Ghana, Saudi Arabia) equally. Tax treaties do not generally exempt sellers from FIRPTA withholding at closing, though they may reduce the ultimate tax rate on the capital gain.
Real FIRPTA Examples — What's Withheld vs What You Get Back
🏠 Example 1: Miami Condo — UAE Investor
Sale price$700,000
FIRPTA withholding at closing (15%)-$105,000
Original purchase price (cost basis)$500,000
Capital gain$200,000
Capital gains tax (est. 20% rate)$40,000
FIRPTA refund (excess withholding)$65,000 REFUNDED
🏠 Example 2: Texas Property — Mexican Investor (Treaty Country)
Sale price$500,000
FIRPTA withholding at closing (15%)-$75,000
Original purchase price (cost basis)$300,000
Capital gain$200,000
Capital gains tax (treaty / est.)$30,000–$40,000
FIRPTA refund (excess withholding)$35,000–$45,000 REFUNDED
How to Recover FIRPTA Withholding — Step by Step
1
Get Your ITIN Before the Sale (Ideally)
Apply at itinplus.com. Takes 7–11 weeks. If you already sold and don't have an ITIN, apply now — you'll need it for the 1040-NR filing.
2
Collect Form 1042-S from Closing
The buyer (or their closing agent) must provide Form 1042-S showing the FIRPTA withholding amount. Keep this document — it's used on Form 1040-NR.
3
File Form 1040-NR for the Tax Year of Sale
File Form 1040-NR with your ITIN. Report the sale price, cost basis, capital gain, and claim the FIRPTA withholding as a tax credit. IRS calculates actual tax and issues refund.
4
Receive Your Refund
IRS issues refund to your nominated bank account or mailed check. Timeline: 4–6 months after filing Form 1040-NR if accurate and complete.
FIRPTA Withholding Certificate — Reduce Withholding Before Closing
Instead of waiting for a refund after filing, you can apply for a FIRPTA Withholding Certificate (Form 8288-B) before closing. If approved, the IRS reduces the withholding at closing from 15% to the amount of estimated actual tax — potentially saving you cash flow at closing.
⚠️ Timing is critical: Form 8288-B must be filed before or on the date of closing. IRS processing typically takes 90 days — start this process as early as possible once a sale is under contract. Your ITIN must already be issued to include it on Form 8288-B.
Why You Need an ITIN for FIRPTA
Your ITIN is required at every step of the FIRPTA process:
- At closing: Closing documents and Form 8288 (buyer's FIRPTA filing) need your US TIN as the foreign seller.
- For Form 8288-B: Withholding certificate application requires your ITIN.
- For Form 1040-NR: You cannot file Form 1040-NR without a US TIN (ITIN).
- For refund issuance: IRS issues refund checks or direct deposits associated with the TIN on the 1040-NR.
Apply for your ITIN now — before you sell. ITIN Plus processing: 7–11 weeks.
Selling US Property? Get Your ITIN Before You Close
Without an ITIN, you cannot recover FIRPTA withholding. Apply now — 7–11 weeks. $99. IRS CAA, no passport mailing required.
Apply for ITIN — $99 →✅ IRS CAA✅ 7–11 Weeks✅ Required for Form 1040-NR
FAQs — FIRPTA & ITIN
Is FIRPTA 10% or 15%?
As of February 2016, the standard FIRPTA withholding rate is 15% of the gross sales price. For properties sold for $300,000 or less that will be the buyer's primary residence, the rate is 10%. For commercial property or sales above $1 million, 15% always applies.
Does FIRPTA apply if I have a US LLC that owns the property?
Yes. A foreign-owned US LLC is itself treated as a foreign person for FIRPTA purposes. FIRPTA withholding applies when a foreign-owned LLC sells US real property. Both the LLC (as seller) and the foreign owner (for 1040-NR filing) need their respective tax IDs.
Can I avoid FIRPTA withholding?
You cannot avoid the withholding at closing without a FIRPTA Withholding Certificate (Form 8288-B) approved by the IRS before closing. However, you can recover excess withholding by filing Form 1040-NR after the tax year of sale. Start early — apply for ITIN 7–11 weeks before you expect to close.
How long do I have to file Form 1040-NR to recover FIRPTA withholding?
The statute of limitations for claiming a refund on Form 1040-NR is generally 3 years from the original due date of the return. File promptly — don't let refundable withholding expire unclaimed.
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Written by ITIN Plus — IRS Certified Acceptance AgentGeneral information only, not tax or legal advice. FIRPTA rules are complex — consult a licensed US tax professional for your specific property sale situation.