BUYER GUIDE · 5 MIN READ
FIRPTA: What Foreign Owners Face When Selling
Buying is not taxed under FIRPTA — selling is where the 15% withholding bites. Plan your exit on the way in.
1. What FIRPTA actually is
FIRPTA applies when a foreign person sells US real estate: the buyer generally must withhold 15% of the sale price and remit it to the IRS. Exceptions and reduced rates exist depending on price and use, and the withholding is a prepayment against your actual tax — you file a return to settle the true amount. Crucially, FIRPTA does not tax you for buying.
2. Planning the exit from day one
Because the withholding is calculated on the sale price (not the gain), it can lock up meaningful cash at closing. Owners who plan ahead — obtaining an ITIN early via Form W-7, keeping clean records of cost basis and improvements, and getting advice on exceptions before listing — settle faster and keep more liquidity through the sale.
FAQ
Does FIRPTA apply when I buy?
No — it applies when a foreign person sells. (If your seller is foreign, your side handles the withholding through escrow.)
Is the 15% my final tax?
No, it's withholding — a prepayment. You file a US return (using your ITIN) and settle the actual amount, often recovering part of it.
PUT IT TO WORK
Questions about your situation? Our AI advisor answers from these same vetted sources — and scans every live listing while you talk.
SOURCES
- IRS — FIRPTA — FIRPTA (selling later as a foreign owner)
- IRS — ITIN — ITIN
General information only — not legal, tax, or lending advice. Rules change; verify with official sources and licensed professionals. Updated 2026-07-09.
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