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Closing · federal taxFIRPTA withholding: what the TC needs to know

When the seller is a foreign person, the buyer generally must withhold 15% of the amount realized and pay it to the IRS on Form 8288 within 20 days after the transfer. The rate is 10% if the buyer will live in the home and the price is no more than $1,000,000, and no withholding is required if the buyer will live there and the price is no more than $300,000. If the seller is not foreign, a signed non-foreign certification ends the question.

The rule in four parts

  1. Who withholds

    In most cases the buyer (transferee) is the withholding agent. The buyer must find out whether the seller is a foreign person; a buyer who fails to withhold may be held liable for the tax.

  2. How much

    Generally 15% of the amount realized – the cash, the value of other property and any liability assumed. 10% if the buyer acquires the property as a residence and the amount realized is no more than $1,000,000 (IRC §1445(c)(4)).

  3. Residence up to $300,000

    No withholding if the buyer is an individual who acquires the property as a residence for no more than $300,000 and the buyer or family has definite plans to live there at least 50% of the days it is used in each of the first two 12-month periods.

  4. Reporting

    Form 8288 with copies A and B of Form 8288-A, generally by the 20th day after the transfer. The IRS stamps copy B and sends it to the seller, who claims the credit on a US tax return. A Form 8288-B application can ask for reduced withholding.

The non-foreign certification

  1. What it is

    The seller certifies, under penalties of perjury, that it is not a foreign person – with its name, US taxpayer identification number and home (or office) address.

  2. Qualified substitute

    The seller can give it to a qualified substitute – the person responsible for closing (such as the attorney or title company, other than the seller's agent) or the buyer's agent – who gives the buyer a statement that it holds the certification.

  3. When it does not protect

    A certification is not effective if the buyer or substitute knows it is false. An agent who knows it is false must tell the buyer, or becomes liable – up to the agent's compensation from the deal.

What the TC tracks

  • Early in the file: is the seller a foreign person? Ask the title company or attorney how they collect the certification.
  • If the seller is foreign: who withholds, at what rate, and whether a Form 8288-B application is pending at closing.
  • The 20-day deadline for Form 8288 after the transfer – on the post-closing timeline.
  • That the seller has a US taxpayer identification number (or applies for an ITIN with Form W-7) – without it the IRS does not send the stamped copy B.
  • Form 1099-S: the closing agent generally reports the sale to the IRS.

Questions about FIRPTA

What is the FIRPTA withholding rate?

Generally 15% of the amount realized; 10% if the buyer acquires the property as a residence and the amount realized does not exceed $1,000,000.

Is there FIRPTA withholding on a home under $300,000?

Not if the buyer is an individual acquiring it as a residence for no more than $300,000 and plans to live there at least half the days it is used in each of the first two years.

Who pays FIRPTA withholding to the IRS?

The buyer, as withholding agent, on Form 8288 with Forms 8288-A, generally within 20 days after the transfer.

How does a US seller avoid FIRPTA withholding?

By giving the buyer, or a qualified substitute, a signed certification that the seller is not a foreign person, with its name, taxpayer identification number and address.

Does a foreign-owned US LLC trigger FIRPTA?

Withholding depends on whether the transferor is a foreign person; a domestic entity that itself disposes of property acts as withholding agent in some cases. Ask the closing attorney or a tax adviser – the entity type matters.

Related guides

Add the FIRPTA certification and the 20-day Form 8288 date as tasks on the deal in ClosingCode – owner, due date and reminders in one place.

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Sources: 26 U.S.C. §1445; IRS, “FIRPTA withholding”, “Exceptions from FIRPTA withholding” and “Reporting and paying tax on U.S. real property interests” (irs.gov, read October 24, 2026).

General information, not tax or legal advice. Withholding is decided by the buyer and the closing agent with their advisers. ClosingCode is software; it is not a law firm, CPA firm or title company.