How much FIRPTA withholding applies when a nonresident sells a U.S. home?
When a foreign seller sells U.S. real estate, the buyer generally withholds 15% of the sale price. If the buyer will use the home as a residence, there's no withholding up to $300,000 and 10% up to $1,000,000. The buyer files Forms 8288 and 8288-A within 20 days of closing. To reduce withholding, the seller must file Form 8288-B on or before the closing date, and the IRS usually takes about 90 days to act on it. The seller recovers any excess by filing Form 1040-NR with an ITIN.
- 15%
- The general rate, applied to the sale price (not the gain)
- $300,000 / $1,000,000
- Buyer's residence: 0% up to $300,000, 10% up to $1,000,000
- 20 days
- Deadline after closing to file Forms 8288 and 8288-A
- ~90 days
- Typical IRS time to act on Form 8288-B, which must be filed by closing
At a glance
- When a foreign person sells U.S. real estate, the buyer generally withholds 15% of the sale price, not of the gain.
- If the buyer will live in the home: no withholding up to $300,000, 10% up to $1,000,000.
- The buyer files Forms 8288 and 8288-A within 20 days of closing.
- To withhold less, file Form 8288-B on or before closing. The IRS usually takes about 90 days.
- The seller gets any excess back by filing Form 1040-NR with an ITIN. North Carolina doesn't require state withholding. It only requires the buyer to file Form NC-1099NRS.
What is FIRPTA, and who withholds?
FIRPTA (the Foreign Investment in Real Property Tax Act) requires the buyer to withhold part of the price when a foreign person sells U.S. real estate and send it to the IRS as a prepayment of the seller's tax. The legal duty is the buyer's. In practice, the closing attorney or title company handles it at closing.
"Foreign person" is a tax term here: an individual who has no green card and doesn't meet the substantial presence test, or a foreign entity. U.S. citizens, green card holders and anyone who is a U.S. resident under the substantial presence test sign a non-foreign certification at closing, and nothing is withheld.
The key point: withholding is not the final tax. The actual tax is figured on the real gain on Form 1040-NR, and anything over-withheld comes back.
How much is withheld? What if the buyer will live there?
The general rate is 15% of the sale price. If the buyer is an individual who will use the home as a residence (and signs a statement saying so), there's no withholding up to $300,000 and 10% up to $1,000,000. Above $1,000,000, it's 15%.
Read from the top; follow the first row that fits.
| Your situation | Result |
|---|---|
| Seller is not a foreign person (is a U.S. tax resident) | Seller signs a non-foreign certification; nothing is withheld |
| Seller is foreign, and Form 8288-B was filed on or before closing | Follow the IRS determination; withheld funds held in escrow until then |
| Seller is foreign, no 8288-B, and the buyer is not an individual who will use the property as a residence | Withhold 15% of the sale price |
| Buyer is an individual who will use it as a residence, price $300,000 or less | No withholding |
| Buyer is an individual who will use it as a residence, price over $300,000 up to $1,000,000 | Withhold 10% |
| Buyer is an individual who will use it as a residence, price over $1,000,000 | Withhold 15% |
For example, take a $600,000 sale. If the buyer is an investor, $90,000 is withheld. If the buyer will live there, it's $60,000. But if the seller paid $550,000 for the home, the actual gain is modest and the real tax will be far less than what's withheld. That gap is why many sellers file Form 8288-B or claim a refund afterward.
What are Forms 8288, 8288-A and 8288-B, and when are they due?
Forms 8288 and 8288-A are how the buyer reports and pays the withholding, due within 20 days of closing. Form 8288-B is the seller's application for a withholding certificate to reduce the amount. It must be filed on or before the closing date, and the IRS usually takes about 90 days to act on it.
Read from the top, in time order.
| When | What happens | Notes |
|---|---|---|
| Listing / contract | Estimate the gain and the withholding early | Prepare Form W-7 (ITIN) and Form 8288-B if needed |
| Closing day | The buyer withholds from the price | Form 8288-B filed no later than today |
| Within 20 days after closing | The buyer files Forms 8288 and 8288-A | If 8288-B is still pending, the closing attorney or title company can hold the funds in escrow |
| About 90 days | The IRS acts on Form 8288-B | Tax is paid per the determination and the excess is released |
| Next filing season | The seller files Form 1040-NR with an ITIN and attaches the IRS-stamped Form 8288-A | Settles the actual tax and claims the refund |
A few details that matter:
- If Form 8288-B was filed by closing and is still pending, the withheld funds don't have to go to the IRS yet. The closing attorney or title company can hold them until the IRS responds.
- Form 8288-B requires the seller's taxpayer ID. A seller without an ITIN needs to apply for one at the same time (ITIN processing usually takes about 7 weeks).
- When the seller files Form 1040-NR, the IRS-stamped copy of Form 8288-A is what proves the withholding was paid.
How does the seller get the excess back?
The seller files Form 1040-NR with an ITIN the following year, figures the tax on the actual gain, and the IRS refunds whatever was over-withheld. With an approved 8288-B, most of the excess is usually released once the IRS acts, without waiting for the next filing season.
Does North Carolina withhold too?
North Carolina doesn't require state withholding. It only requires the buyer to file Form NC-1099NRS. Whether the seller also has an NC filing obligation on the gain is something we review together with the federal return.
Key rules at a glance
| Situation | Withholding / deadline | Notes | Applies to |
|---|---|---|---|
| General rule | 15% | Of the sale price | 2026 |
| Buyer's residence, price $300,000 or less | 0% | Individual buyer, signed residence statement | 2026 |
| Buyer's residence, price up to $1,000,000 | 10% | Once the price is over $300,000, 10% of the full price | 2026 |
| Buyer's residence, price over $1,000,000 | 15% | Same as the general rule | 2026 |
| Forms 8288 / 8288-A | Within 20 days of closing | Buyer reports and pays the withholding | 2026 |
| Form 8288-B | On or before closing | Application to reduce withholding, about 90 days to process | 2026 |
| Refund of excess | Form 1040-NR | Filed by the seller with an ITIN | 2026 |
| North Carolina | No state withholding | Buyer files Form NC-1099NRS | 2026 |
Common mistakes
"The 15% is my tax."
It's a prepayment based on the sale price, not a tax on your gain. The real tax is settled on Form 1040-NR, and the excess is refunded.
"I can file Form 8288-B after closing."
It has to be filed on or before the closing date. Miss that and the full amount is withheld, and you wait for your 1040-NR refund.
"I can get a refund without an ITIN."
The refund comes through Form 1040-NR, which needs an ITIN, and so does Form 8288-B. With about 7 weeks for processing, apply early.
"North Carolina withholds state tax too."
It doesn't. NC only requires the buyer to file Form NC-1099NRS.
Before closing, or after closing: what to do
The earlier you start, the more options you have. Ideally, start when the home is listed or under contract.
- Situation A: Not closed yet. Estimate the gain and the withholding. If withholding will clearly exceed the tax, prepare Form 8288-B (and an ITIN application if needed) and file it on or before closing. Agree on escrow arrangements with the closing attorney or title company.
- Situation B: Already closed with 15% withheld. Confirm the buyer filed Forms 8288 and 8288-A within 20 days and get the IRS-stamped 8288-A. The following year, file Form 1040-NR with an ITIN to claim the refund.
- Situation C: The home was a rental. Beyond the gain, there's depreciation recapture to account for, and any rental years that were never reported on Form 1040-NR need to be filed too (see our Schedule E guide).
For real estate agents and closing attorneys: working with us
We regularly work with real estate agents, brokerages, closing attorneys and title companies on FIRPTA withholding. Here's what agents ask us most.
When should I refer a seller?
As early as possible, ideally at listing or contract. Form 8288-B has to be filed on or before closing, and a seller without an ITIN needs one at the same time, so the paperwork takes lead time. Once you know the seller is a foreign person (no green card, not living in the U.S.), send them our way for a free assessment.
What documents do we need?
- Seller's passport, and ITIN if they have one (if not, we handle it as a CAA, and the original passport isn't mailed)
- The closing statement from the original purchase (Closing Disclosure or HUD-1)
- Invoices and records for improvements
- For rentals, prior tax returns and depreciation records
- The current purchase contract and estimated settlement statement
- Contact details for the closing attorney or title company
- The buyer's signed residence statement, if the buyer will live there
How are different situations handled?
| Situation | What happens | Watch out for |
|---|---|---|
| Seller is a U.S. citizen, green card holder or resident under the substantial presence test | Non-foreign certification, no withholding | Visa holders living in the U.S. may be tax residents. Apply the substantial presence test. |
| Individual buyer's residence, price $300,000 or less | No withholding | Buyer signs a residence statement |
| Individual buyer's residence, price up to $1,000,000 | 10% of the sale price | Same |
| Investor buyer, or price over $1,000,000 | 15% of the sale price | General rule |
| Seller expects a small gain or a loss | File Form 8288-B on or before closing | About 90 days to process. Funds held in escrow meanwhile. |
| Seller has no ITIN | Apply for the ITIN alongside Form 8288-B | ITIN processing usually takes about 7 weeks |
| Seller co-owns with a U.S. person | Withholding is generally figured on the foreign seller's share only | Confirm ownership shares before settlement |
| Property in North Carolina | No state withholding | Buyer files Form NC-1099NRS |
How the partnership works
- Referral: Introduce the seller to us, or start a three-way chat, and we'll do a free assessment.
- Written assessment: Estimated withholding, estimated tax and whether Form 8288-B is worth filing, sent to the seller and to you.
- Closing coordination: We confirm with the closing attorney or title company that 8288-B was filed and how funds will be escrowed, and help with Forms 8288 / 8288-A where needed.
- After closing: We follow up on the IRS response to 8288-B and file the seller's Form 1040-NR the following year to recover the excess.
We've handled FIRPTA withholding with many agents and brokerages
We work with many real estate agents, brokerages and closing attorneys on withholding for nonresident sellers, and we've handled a lot of these cases. One team covers the pre-closing assessment, the 8288-B application, Forms 8288 / 8288-A and the following year's 1040-NR refund.
- Big Four background, 15+ years in U.S. tax, 10 years of U.S.–China cross-border work, credentialed as CPA, EA and CAA
- Form 8288-B applications, Forms 8288 / 8288-A and Form 1040-NR refunds, start to finish
- IRS Certifying Acceptance Agent: sellers without an ITIN don't have to mail their passport
- Rental-period filings and depreciation recapture handled together, in English and Chinese, with sellers, agents and closing attorneys
How it works
- 1
Free assessment
A 15-minute call on whether the seller is a foreign person, the likely withholding and whether 8288-B makes sense.
- 2
Applications
The ITIN (if needed) and Form 8288-B, filed on or before closing.
- 3
Closing coordination
Escrow and filings confirmed with the closing attorney or title company.
- 4
Refund and settlement
Follow-up on the 8288-B, then Form 1040-NR the next year to recover the excess.
FAQ
How much FIRPTA withholding applies when a nonresident sells a U.S. home?
Generally 15% of the sale price. If the buyer is an individual who will live in the home, there's no withholding up to $300,000 and 10% up to $1,000,000.
Is the 15% the tax I owe?
No. It's a prepayment based on the sale price. Your actual tax is figured on the gain on Form 1040-NR, and any excess is refunded.
When is Form 8288-B due, and how long does it take?
It must be filed on or before the closing date, and the IRS usually takes about 90 days. Meanwhile, the withheld funds can be held in escrow by the closing attorney or title company.
How do I get the over-withheld tax back?
File Form 1040-NR with an ITIN the following year and attach the IRS-stamped Form 8288-A. The tax is settled on your actual gain and the IRS refunds the rest.
Can YCL help me with this?
Yes. We work with many agents and brokerages on FIRPTA withholding, handling Form 8288-B, Forms 8288 / 8288-A and the 1040-NR refund, plus the ITIN if needed. Sellers and agents can book a free 15-minute call.
Related guides
Sources
- IRS: FIRPTA Withholding (irs.gov)
- IRS: Instructions for Form 8288 and Form 8288-A
- IRS: Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
- IRS: Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- IRS: Publication 519, U.S. Tax Guide for Aliens; Instructions for Form 1040-NR
- NC Department of Revenue: Form NC-1099NRS
Selling soon, or closing with a foreign seller?
Book a free 15-minute call. A CPA will estimate the withholding and tell you whether Form 8288-B makes sense, with no fee and no sales pitch.