Last updated: November 7, 2026
Short answer: FIRPTA is a federal rule for sales of U.S. real estate by foreign persons. When it applies, the IRS says the buyer generally must withhold 15% of the amount realized. Exceptions exist, including some sales of $300,000 or less to a buyer who will live there, and sellers can request a withholding certificate.
Key takeaways
- FIRPTA depends on whether the seller is a foreign person for U.S. tax purposes. That is a tax-status question.
- When it applies, the IRS says the withholding rate is generally 15% of the amount realized, and the buyer is usually the withholding agent.
- A U.S. seller usually signs a certification of non-foreign status, so no FIRPTA withholding is needed.
- A foreign seller can apply for a withholding certificate (Form 8288-B). The IRS says it generally acts within 90 days of a complete application.
Want to talk it through? Book a time to chat with me (30 minutes, 9 AM–7 PM Arizona time).
¡Qué tal! I'm Rosie Armenta. If you own a home in Avondale, AZ and you live outside the U.S., or you are not sure how the IRS classifies you, FIRPTA is a word you want to hear early, not the week of closing. Planning ahead helps you know what your net proceeds may look like and keeps your buyer's closing on track.
What is FIRPTA, in plain words?
FIRPTA stands for the Foreign Investment in Real Property Tax Act. According to the IRS FIRPTA Withholding page (checked November 7, 2026), people who buy U.S. real property from foreign persons generally must withhold tax from the sale. Usually the buyer is the withholding agent, and the buyer must find out whether the seller is a foreign person. In practice, the escrow or title company usually handles the paperwork for the buyer.
The withholding is not always the final tax. It is a prepayment that the seller reports on a U.S. tax return. The real tax owed may be more or less.
How much is withheld?
The IRS says the rate is generally 15% of the amount realized. The amount realized is the sum of the cash paid or to be paid (principal only), the fair market value of other property transferred or to be transferred, and any liability the buyer assumes or to which the property is subject immediately before and after the transfer.
Example only: made-up round numbers to show how withholding works at closing. This is not a real Avondale sale, not a tax calculation and not your actual net.
| Example only | Amount |
|---|---|
| Made-up amount realized (sale price, no exception applied) | $400,000 |
| General FIRPTA rate | 15% |
| Made-up FIRPTA withholding sent to the IRS (not the final tax) | $60,000 |
| Made-up loan payoff and closing costs combined | $200,000 |
| Simplified amount left at closing in this made-up case | $140,000 |
The $60,000 is withholding, not the tax the seller finally owes. The seller reports the sale on a U.S. tax return, and the actual tax may be higher or lower. An exception or an IRS withholding certificate could reduce or remove the withholding, and a real closing statement has more line items. This is general information, not tax or legal advice; please consult a CPA or tax professional about your sale. That is why foreign sellers often talk with a tax professional before listing. My post on how to read a seller's net sheet in Arizona shows where items like this appear.
What are the main exceptions?
The IRS lists several situations where FIRPTA withholding generally is not required. Two that come up for homes are:
| Situation | What the IRS says |
|---|---|
| Seller is not a foreign person | The seller gives a certification, under penalties of perjury, with name, U.S. taxpayer identification number and home address. It can go to a qualified substitute, such as the title company. |
| Buyer will live there and the price is $300,000 or less | No withholding if the buyer or the buyer's 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. |
The IRS also describes a reduced withholding amount when the buyer will use the home as a residence and the amount realized is between $300,000 and $1 million. Confirm whether that applies with your tax professional and escrow.
What is a withholding certificate?
A withholding certificate is IRS approval for reduced or no withholding, often when the expected tax is lower than the standard withholding. The IRS says the buyer, the buyer's agent or the seller can apply on Form 8288-B, and the IRS generally acts within 90 days after receiving a complete application, including taxpayer identification numbers. If the seller has no TIN, the IRS FAQ says an ITIN request filed with Form W-7 and Form 8288-B is processed within 10 days of receipt.
What should I do first as a seller?
- Find out how the IRS classifies you by talking with a CPA or tax attorney who handles international tax.
- Tell escrow early so they can prepare the right FIRPTA forms.
- Ask about a withholding certificate and the timing if you think the standard amount is too high.
- Get a TIN or ITIN if you do not have one.
- Plan your filing. The IRS FAQ notes that the home-sale gain exclusion may apply to nonresident aliens who qualify, so ask your tax professional.
For U.S. tax basics on home sales, see do I pay taxes when I sell my house in Avondale, AZ.
Save this before you list, and share it with a relative who owns a home in Arizona but lives abroad.
Thinking about selling while living outside the U.S.? Book a time to chat with me (30 minutes, 9 AM–7 PM Arizona time), or call or text me at 623-295-5770.
Frequently Asked Questions
Does FIRPTA apply to every home sale?
No. It applies when the seller is a foreign person for U.S. tax purposes. A U.S. seller usually signs a certification of non-foreign status, and no FIRPTA withholding is taken.
What is the FIRPTA withholding rate?
The IRS says the rate is generally 15% of the amount realized, with exceptions and reduced amounts in some residence sales.
Who is responsible for withholding?
Usually the buyer is the withholding agent. Escrow or title companies usually handle the forms on the buyer's behalf.
Is the FIRPTA withholding my final tax?
No. It is a prepayment. The seller reports the sale on a U.S. tax return, and the final tax may be higher or lower.
Is there an exception for homes under $300,000?
Yes, when the buyer or the buyer's family plans to live in the home as the IRS defines, and the amount realized is $300,000 or less.
How long does a withholding certificate take?
The IRS says it generally acts within 90 days after receiving a complete Form 8288-B application with taxpayer identification numbers.
Do I need a Social Security number to sell?
Not always. A seller without one may need an ITIN for FIRPTA forms. The IRS says it can process an ITIN request filed with Form 8288-B within 10 days of receipt.
Can a dual citizen or green card holder be subject to FIRPTA?
Tax status, not citizenship by itself, decides it. Ask a CPA or tax attorney how the IRS classifies you before you list.
I'm a real estate agent, not a CPA or a tax attorney. I can't tell you how the IRS classifies you or how much tax you will owe. Please talk with a tax professional who handles international tax before you list.
This article is general information, not legal, tax, or financial advice. Please talk with a licensed attorney, CPA, or lender about your situation.
About the author
Rosie Armenta | West USA Realty. Avondale (85392) is her home base, and she helps buyers and sellers across the West Valley in English and Spanish. Book a time to chat with me (30 minutes), or call or text 623-295-5770. Selling? Get a home value report.
Rosie Armenta | West USA Realty | Equal Housing Opportunity
Information was checked on November 7, 2026, from the IRS pages FIRPTA Withholding, Exceptions from FIRPTA Withholding and Withholding Certificates. Tax rules can change, so please confirm current details with a CPA or tax attorney and your escrow officer.