Who withholds, and how much?
The Foreign Investment in Real Property Tax Act (FIRPTA) authorizes the U.S. to tax foreign persons on dispositions of U.S. real property interests. In most cases the buyer is the withholding agent and must find out whether the seller is a foreign person; a buyer who fails to withhold when required may be held liable for the tax.
The general rate is 15% of the amount realized, which is the cash paid or to be paid, the fair market value of other property transferred, and any liability the buyer assumes or that the property is subject to. If a foreign person co-owns with a U.S. person, the amount realized is allocated by each owner's capital contribution, and spouses are treated as contributing 50% each.[1]
When is withholding reduced or not required?
As of 2026, the IRS describes these common situations; notification requirements still apply when an exception is used:
- 10% rate: the buyer acquires the property for use as the buyer's residence and the amount realized is $1 million or less.
- No withholding: an individual buyer acquires the home as a residence for $300,000 or less, and the buyer or certain relatives have definite plans to live there at least 50% of the days it's used in each of the first two 12-month periods after the sale.
- No withholding: the seller certifies under penalties of perjury, with a U.S. taxpayer identification number, that they are not a foreign person.
- Reduced or no withholding: the IRS issues a withholding certificate, applied for on Form 8288-B.[2][4]
What happens after closing?
The buyer generally must file Form 8288 and pay the withheld tax to the IRS by the 20th day after the transfer, attaching Form 8288-A for each seller. The IRS stamps a copy of Form 8288-A and sends it to the seller, who must file a U.S. income tax return and attach it to receive credit for the tax withheld.
If a Form 8288-B application is pending at closing, the buyer must still withhold, but doesn't have to pay it over until 20 days after the IRS mails its decision. A seller without a U.S. taxpayer identification number can apply for an ITIN by attaching Form 8288-B to Form W-7. Because timing matters, a foreign seller should talk with a CPA or tax professional experienced in international tax well before listing.[3]
Key takeaways
- As of 2026, FIRPTA withholding is generally 15% of the amount realized on a sale by a foreign person.
- It's 10% for a buyer's residence at $1 million or less, and zero for a qualifying residence purchase at $300,000 or less.
- The buyer is generally the withholding agent and can be liable for failing to withhold.
- An IRS withholding certificate (Form 8288-B) can reduce withholding, so start the application early.
- The amount withheld is credited against the seller's U.S. tax when they file a U.S. return.
Sources
- [1]IRS — FIRPTA withholding
- [2]IRS — Exceptions from FIRPTA withholding
- [3]IRS — Reporting and paying tax on U.S. real property interests
- [4]IRS — Instructions for Form 8288
Reviewed October 11, 2026. General real-estate information for Florida, not legal, tax, lending or insurance advice. Laws, rates and deadlines change — confirm property-specific facts with the agency cited, a Florida real-estate attorney, CPA or licensed insurance agent.