Selling U.S. Property as a Non-Resident? Here’s What FIRPTA Means for You!

 

Investing in U.S. real estate can be highly lucrative for foreign investors, but selling property as a non-resident comes with specific tax obligations under the Foreign Investment in Real Property Tax Act (FIRPTA). Understanding FIRPTA is crucial to avoid unexpected tax liabilities, delays in property sales, or legal complications. In this guide, we explore what FIRPTA real estate sale means, how it affects non-resident sellers, and how professional guidance can simplify the process.

What is FIRPTA?

The Foreign Investment in Real Property Tax Act (FIRPTA) is a U.S. federal law designed to ensure that foreign investors pay taxes on gains from selling U.S. real estate. When a non-resident alien sells U.S. property, the buyer is required to withhold a percentage of the gross sales price and remit it to the IRS. This withholding acts as a prepayment toward the seller’s U.S. tax obligation.

Without proper understanding, this withholding can be a significant financial burden or cause delays in closing property transactions.

Who Does FIRPTA Apply To?

FIRPTA applies specifically to foreign persons, which includes individuals, corporations, partnerships, or trusts not classified as U.S. residents for tax purposes. If you fall under this category and own U.S. real estate, FIRPTA rules are mandatory whenever you sell your property.

It’s important to note that FIRPTA does not apply to U.S. citizens or resident aliens, though they may still face other capital gains tax obligations. 

How FIRPTA Withholding Works?

When a foreign seller decides to sell U.S. real estate, the buyer is generally required to withhold 15% of the gross sales price for most transactions (as of 2025). This withholding percentage can sometimes be reduced if the seller applies for a withholding certificate from the IRS.

The steps typically include:

• Buyer notifies the IRS of the transaction
• Buyer withholds the required amount
• Buyer submits the withheld amount to the IRS
• Seller files a U.S. tax return to report the actual gain or loss and reconcile the withholding

This system ensures the U.S. government collects taxes owed on property gains by foreign investors.

FIRPTA Compliance Challenges

For many non-resident sellers, FIRPTA compliance can feel complex because it involves:

• Calculating the correct withholding based on the gross sales price
• Applying for withholding certificates when eligible
• Filing accurate U.S. tax returns
• Coordinating with buyers and real estate agents who may not be familiar with FIRPTA procedures

Failing to comply with FIRPTA rules can result in penalties, delayed closings, or even legal disputes. This is why expert guidance is invaluable. 

How Professional FIRPTA Services Help?

Working with a FIRPTA tax professional simplifies the entire process. Experts provide:

• Guidance on withholding obligations
• Assistance in applying for reduced withholding certificates
• Preparation and filing of U.S. tax returns
• Coordination with buyers, escrow agents, and attorneys
• Minimizing tax liabilities legally and efficiently

For non-resident investors, leveraging FIRPTA solutions and services ensures smooth property sales and peace of mind.

Planning Ahead to Optimize Your Sale

Non-resident sellers can also take proactive steps to reduce FIRPTA complications:

• Keep detailed records of property purchase prices, improvements, and expenses
• Understand FIRPTA withholding rules before listing the property
• Consult with tax professionals early to apply for certificates or exemptions
• Coordinate with buyers experienced in FIRPTA transactions

Planning ahead not only saves time but can also improve financial outcomes and prevent unnecessary withholding.

Key Takeaways

Selling U.S. property as a non-resident requires a clear understanding of FIRPTA and its withholding requirements. FIRPTA ensures foreign investors meet their U.S. tax obligations, but the process can be complicated without proper guidance. By leveraging expert FIRPTA Solutions and Services, non-resident sellers can streamline transactions, reduce tax risks, and maximize their returns.

Secure a Smooth Sale with Expert FIRPTA Guidance

Handling FIRPTA does not have to be overwhelming. With the right guidance and professional support, foreign investors can sell U.S. real estate confidently, comply with tax obligations, and secure optimal financial outcomes.

Take control of your U.S. property sale today.

Frequently Asked Questions (FAQs)

What percentage of the sales price is withheld under FIRPTA?

Generally, 15% of the gross sales price must be withheld for most property sales by foreign investors.

Can I reduce FIRPTA withholding?

Yes, by applying for a withholding certificate from the IRS, sellers may reduce the withholding amount based on the expected tax liability.

Do I need to file a U.S. tax return after selling property?

Yes, all non-resident sellers must file a U.S. tax return to report actual gains and reconcile any withholding.

Does FIRPTA apply to all foreign property owners?

FIRPTA applies to foreign individuals, corporations, partnerships, and trusts who sell U.S. real estate. U.S. citizens and resident aliens are generally exempt.

How can I make FIRPTA compliance easier?

Working with FIRPTA tax professionals or leveraging FIRPTA Solutions and Services ensures accurate withholding, timely filing, and minimal risk of penalties.