Frequently Asked Questions

What is FIRPTA income tax withholding?

FIRPTA (Foreign Investment in Real Property Tax Act) generally requires withholding on the sale of U.S. real property by a foreign seller. The withholding agent reports and remits the tax to the IRS.​

 

What happens if the forms and withholds are not done correctly?

The buyer may be held liable for the required withholding and must file Forms 8288/8288-A; the IRS can assess penalties and interest on unpaid withholding; the foreign seller remains responsible for U.S. tax on the gain and may owe tax despite no withholding.​

 

Who files FIRPTA Forms 8288 and 8288-A?

The withholding agent files Forms 8288 and 8288-A and submits the withheld tax to the IRS.​

 

What is the difference between Form 8288-A and Form 8288-B?

Form 8288-A reports the tax withheld from the sale. Form 8288-B is an application requesting reduced or zero withholding when the seller qualifies.

 

​When must FIRPTA forms be filed?

Forms 8288 and 8288-A must be filed within 20 days of the property transfer. Form 8288-B should be filed before or at closing.

 

​Can FIRPTA withholding be reduced or eliminated?

Yes. Eligible sellers may apply for a withholding certificate using Form 8288-B to reduce or eliminate FIRPTA withholding.