How Foreign Sellers File Form 1040-NR to Get FIRPTA Withholding Back

FIRPTA withholding at closing is a prepayment, not a final tax. To actually recover any over-withholding, the foreign seller must file Form 1040-NR the year after the sale. Here's exactly how the refund mechanism works.

The basic refund mechanic

FIRPTA withholding at closing is not a tax — it's a prepayment of tax. The actual tax owed by the foreign seller is calculated on Form 1040-NR (U.S. Nonresident Alien Income Tax Return) for the year of sale. The 1040-NR figures the actual U.S. tax on the gain; the withheld FIRPTA amount is claimed as a credit; any over-withholding is refunded.

This is true whether the buyer withheld 15% of the gross at closing (no 8288-B filed) or a reduced amount (8288-B certified pre-closing). Either way, the 1040-NR is the mechanism that reconciles the prepayment to the actual liability.

The required attachment: Form 8288-A Copy B

The single most important piece of paper in the FIRPTA refund process is Form 8288-A Copy B, stamped by the IRS after the buyer filed Forms 8288 + 8288-A. The IRS mails the stamped Copy B back to the seller (at the address provided on Form 8288-A line 4) typically 4-6 months after the buyer filed.

Without the stamped 8288-A, the seller cannot prove the withholding occurred — and the IRS will deny the credit claim on the 1040-NR. A copy of the wire confirmation, the closing statement showing the withheld amount, even the buyer's own Form 8288 — none of these substitute. The IRS requires the stamped Copy B as the exclusive proof.

If the stamped 8288-A never arrives or is lost, the seller can file Form 4506 to request a copy from the IRS. Expect a 4-8 week wait. Plan ahead.

Filing deadline: June 15, not April 15

A foreign individual with no U.S. wage income has a Form 1040-NR filing deadline of June 15 of the following year — not April 15. This is per IRC §6072(c).

If the foreign seller had any U.S. wage income (rare for property sellers), the deadline reverts to April 15.

Either way, an automatic 6-month extension is available by filing Form 4868 before the deadline — pushing the return out to October 15 (or December 15 for wage earners). The extension is to FILE, not to PAY; if there's a balance due, interest accrues from the original due date.

Worked example: $750K Florida sale

Same scenario as our Florida guide. Brazilian seller, $750K sales price, $420K basis, $330K gain, no Form 8288-B filed (closing was too soon).

At closing: Buyer withholds 15% of $750K = $112,500 sent to IRS Ogden within 20 days. Buyer files Forms 8288 + 8288-A.

4-6 months later: IRS returns the stamped 8288-A Copy B to the seller.

Following year (June 15 deadline): Seller files Form 1040-NR:

• Schedule D + Form 8949 report the $330K gain on the property sale
• Long-term capital gains rate (assuming property held more than a year): 20% federal for the top bracket, plus possible 3.8% net investment income tax = ~24% on the $330K gain = ~$79,200
• Form 1040-NR line 25e claims the FIRPTA credit: $112,500 (per the stamped 8288-A)
• Refund due: $112,500 - $79,200 = $33,300

The IRS typically processes nonresident refunds in 4-9 months. Total time from closing to refund check: roughly 12-18 months. This is why pre-closing Form 8288-B filing is so valuable: it eliminates the year-plus wait by matching withholding to actual tax up front.

What you'll need to file

• Form 1040-NR — the return itself
• Schedule D + Form 8949 — capital gains reporting
• Form 8288-A Copy B (stamped) — proof of withholding (attached to the return)
• Closing settlement statement (HUD-1 or ALTA) — proof of sales price and seller's net proceeds
• Original purchase contract + improvement records — supports the basis claim
• ITIN — required to file (Form W-7 if you don't already have one; processing 7-12 weeks)
• State return — separately, if the property is in a state with state income tax (Florida and a handful of other states don't have state income tax)

Common 1040-NR mistakes that delay refunds

1. Missing or mis-stamped 8288-A. The #1 reason refund claims get rejected. Always confirm the stamped Copy B is in hand before filing. If you don't have it, request a copy via Form 4506 BEFORE filing the 1040-NR.

2. Wrong basis. The basis is original purchase price PLUS capital improvements MINUS any prior depreciation taken (if the property was rented). Foreign sellers often forget to deduct depreciation if the property was a vacation rental for part of the holding period — this overstates basis and understates gain, which the IRS may catch on audit.

3. Wrong holding period. Long-term capital gains rates (much lower than ordinary income) require the property to have been held MORE than 12 months. Sales at exactly 12 months are short-term and taxed at higher rates.

4. State tax oversight. If the property is in California, Hawaii, Maryland, etc., a state nonresident return is also required and the state withholding (HARPTA, etc.) is claimed there. Forgetting the state return leaves state withholding stranded.

5. Wrong filing address. Form 1040-NR with attached W-7 goes to Austin, TX (ITIN Operation). Form 1040-NR alone, if the filer already has an ITIN/SSN, goes to a different IRS address depending on whether there's a payment due. The current Form 1040-NR instructions list the correct address for each scenario.

The §899 surcharge wrinkle for 2026 returns

Foreign sellers from countries the U.S. has classified as imposing "discriminatory" foreign taxes face an additional Section 899 surcharge of 5-20 percentage points on top of the normal federal capital gains rate. This affects 2026 returns for sellers from a number of European countries currently on the list.

The surcharge is calculated on Schedule SE-NR (a new schedule introduced for the 2025/2026 filing season). The good news: even with the surcharge, the FIRPTA prepayment still applies as a credit on Form 1040-NR line 25e. The bad news: the actual tax owed is higher, so the refund (if any) is smaller.

When to engage help

A FIRPTA 1040-NR with a clean basis history, a single property, and no state-level complications is something an organized seller can prepare independently with good software. The cases that benefit from professional preparation:

• Multiple properties or multi-state portfolios
• Prior depreciation from rental periods
• Capital improvements with sparse records
• State-level withholding stacking (CA, HI, MD, GA, CO)
• §899 surcharge applicability
• Treaty considerations (some bilateral tax treaties affect the U.S. tax on gain)
• Estate-tax overlap if the seller is a foreign decedent's heir

For most foreign sellers, the 1040-NR is the back end of a FIRPTA engagement that started 90+ days before closing. The two ends are coordinated: the 8288-B determines what gets withheld at closing; the 1040-NR reconciles to actual tax and recovers any over-withholding. Done well, they work together as a single arc.

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