When your seller is a foreign national, you need expert tax compliance to protect the deal. We handle all FIRPTA documentation so you can focus on closing.
Common FIRPTA Questions
What triggers FIRPTA withholding?
FIRPTA applies when the seller of U.S. real property is a foreign person—including non-resident aliens, foreign corporations, foreign partnerships, foreign trusts, and foreign estates. The property can be residential, commercial, or land.
Who is responsible for withholding?
The buyer (transferee) is legally responsible for withholding and remitting the tax to the IRS. However, in practice, the closing agent or title company typically handles this. If withholding isn't done correctly, the buyer can be held liable for the full amount plus penalties.
Can the withholding amount be reduced?
Yes. By filing Form 8288-B before closing, the seller can request a withholding certificate to reduce withholding to their actual tax liability. We specialize in these applications and can often significantly reduce or eliminate the withholding requirement.
What are the filing deadlines?
Form 8288 and 8288-A must be filed with the IRS within 20 days of closing. Late filing triggers automatic penalties. For withholding certificate requests (Form 8288-B), filing well before the anticipated closing date gives the IRS time to process.
What happens if FIRPTA isn't handled correctly?
The buyer becomes personally liable for the full 15% withholding amount, regardless of whether they collected it at closing. Additional penalties and interest apply for late or incorrect filings. The IRS can place liens on the property to collect unpaid withholding.