FIRPTA and ITIN for Nigerian Real Estate Investors in the US

⚠️ No US-Nigeria Tax Treaty:

Nigeria has no comprehensive income tax treaty with the United States. All US-source income is subject to standard withholding rates. An ITIN ensures your payments are processed correctly.

💵 Why Dollar Income Is Critical for Nigerians:

With the naira losing significant value, every dollar earned from US platforms matters. An ITIN unlocks full access to US payment platforms and protects your earnings.

What Is FIRPTA and How Does It Affect Nigerian Investors?

FIRPTA (Foreign Investment in Real Property Tax Act) requires buyers of US real estate to withhold 15% of the gross sale price when purchasing from a foreign seller. For Nigerian investors selling US property, this means 15% of your proceeds are withheld at closing — regardless of your actual profit or loss.

For example, if a Nigerian investor sells a US property for $300,000 with only $20,000 in gain, the buyer's agent must still withhold $45,000 (15%) at closing. You recover the difference by filing Form 1040-NR — which requires your ITIN.

ITIN: The Essential Tool for Nigerian Real Estate Investors

An ITIN is required for Nigerian real estate investors in the following situations:

Buying US property — to establish your tax identity with the IRS and receive mortgage interest deduction if applicable
Earning rental income — US rental income must be reported; ITIN required for Form 1040-NR
Selling US property — FIRPTA withholding certificate (Form 8288-B) requires ITIN to reduce or eliminate withholding
Owning through US LLC — your ITIN identifies you as the foreign beneficial owner

How to Reduce FIRPTA Withholding with Form 8288-B

Form 8288-B (Application for Withholding Certificate for Dispositions by Foreign Persons) allows foreign sellers to request reduced FIRPTA withholding based on their actual tax liability rather than 15% of gross sales price. Filing Form 8288-B requires an ITIN.

A successful 8288-B application can reduce withholding from 15% of gross price to your actual estimated tax — potentially saving tens of thousands of dollars.

US Real Estate Structures for Nigerian Investors

Most sophisticated Nigerian real estate investors structure their US holdings through a US LLC for liability protection and simplified tax treatment. However, an LLC does not eliminate FIRPTA — the IRS looks through the LLC to the foreign owner. Your ITIN remains essential regardless of structure.

Get ITIN before purchasing — don't wait until sale time. Apply through ITIN Plus, $99, 8–14 weeks.
Set up US LLC for property holding — consult a real estate attorney for structure.
Open US bank account — Mercury or Relay for rental income collection.
Hire a US CPA — annual reporting of rental income, depreciation, and eventually sale proceeds.
File 8288-B before closing — if selling, apply for withholding certificate before the sale date.

ITIN for Real Estate Investors

$99

IRS CAA · ITIN for property investors · 8–14 weeks

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Frequently Asked Questions

What is FIRPTA withholding rate?

FIRPTA withholding is 15% of the gross sale price for foreign sellers of US real property (10% for properties under $1M that the buyer uses as a primary residence).

Can I avoid FIRPTA as a Nigerian investor?

FIRPTA cannot be fully avoided, but you can apply for a reduced withholding certificate (Form 8288-B) based on your actual tax liability, which requires an ITIN.

Do I pay US capital gains tax on US property sold?

Yes, Nigerian investors pay US capital gains tax on profits from US real estate sales. The rate is 20% for long-term gains plus the 3.8% Net Investment Income Tax.

Does owning US property through an LLC avoid FIRPTA?

No, the IRS looks through disregarded LLCs to the foreign owner. An LLC does not exempt you from FIRPTA.

What is Form 8288-B?

Form 8288-B is an application for a FIRPTA withholding certificate that allows foreign sellers to request reduced withholding based on actual estimated tax liability rather than 15% of gross sale price.