FIRPTA Withholding for Buyers: 15%, 10% or 0%, Form 8288 (2026)

The rule in one table: who withholds, how much, and when

FIRPTA stands for the Foreign Investment in Real Property Tax Act of 1980. The IRS page says it authorized the U.S. to tax foreign persons on dispositions of U.S. real property interests, and that “In most cases, the buyer (transferee) is the withholding agent.” The withholding is a prepayment of the seller’s tax, not an extra tax on the buyer. The buyer becomes liable only if it should have withheld and did not.

Two details trip up readers. First, the IRS FIRPTA page lists only “15%” as the rate (it mentions 10% only for dispositions before February 17, 2016). The 10% rate for a residence is a different rule: it is in 1445(c)(4) and in the Form 8288 instructions, which say withholding “is required at a reduced rate of 10%” for a residence at $1 million or less. Second, a seller who is a U.S. person but holds title through a disregarded entity cannot certify in the entity’s name. The regulation says the entity’s owner is treated as the transferor and must give the certification (Treas. Reg. 1.1445-2(b)(2)(iii)).

What the price line really costs: worked amounts

The percentage is multiplied by the amount realized. Under Treas. Reg. 1.1445-1(g)(5) that is the cash paid or to be paid, plus the fair market value of other property transferred, plus the outstanding amount of any liability the buyer assumes or to which the property is subject before and after the transfer. All amounts below are our arithmetic on those rules.

The cliffs are sharp. At $300,000 the withholding is $0; one dollar more is $30,000.10. At $1,000,000 it is $100,000; one dollar more is $150,000.15, an extra $50,000.15 (our arithmetic). Because the withholding is a share of the price and not of the profit, it can be most of what the seller actually makes. Take an $800,000 sale of a rental: 15% is $120,000. If the seller’s gain were $150,000 (a hypothetical figure), the withholding would be 80% of it (our arithmetic). That is the reason the law lets either side ask for a certificate that caps withholding at the seller’s maximum tax liability (26 U.S.C. 1445(c)(1)).

Spouses and co-owners: whose share is withheld, and which price counts

When the property is owned by a foreign person and a non-foreign person, Treas. Reg. 1.1445-1(b)(3) splits the amount realized by capital contribution and withholds on the foreign persons’ part. For this purpose “a husband and wife will each be deemed to have contributed 50 percent” of what the couple contributed. So an $800,000 sale by a couple in which one spouse is a foreign person is withheld on $400,000; at 15% for an investor buyer that is $60,000 (our arithmetic). If the foreign owners are two or more, they have until the 10th day after the transfer to tell the buyer how to credit the withholding; otherwise it is split equally (Treas. Reg. 1.1445-1(f)(3)(iv)).

The $300,000 exception works differently, and the IRS says so in its FAQ 17: it asks whether the total amount realized is $300,000 or less, not whether each owner’s share is. A $400,000 home owned 50/50 by a foreign person and a U.S. person, bought by someone who will live there, is therefore not exempt. It falls into the 10% band, applied to the foreign owner’s $200,000 share, which is $20,000 (our arithmetic). The IRS answer to that question begins: “Yes, FIRPTA withholding would be required.”

The residence test, and what happens if you fail it

The exception and the 10% band both depend on one fact the buyer controls: that the property is acquired “for use by the transferee as a residence” (1445(b)(5)). Treas. Reg. 1.1445-2(d)(1) turns that into a test measured on the date of transfer. The buyer, or the buyer’s family, must have “definite plans to reside at the property for at least 50 percent of the number of days that the property is used by any person during each of the first two 12-month periods following the date of the transfer.” Days when the property is vacant are not counted. Family is defined by section 267(c)(4), which the IRS explains includes brothers and sisters, a spouse, ancestors and lineal descendants.

The IRS gives an example in FAQ 6. A buyer buys a home for $299,000 and then spends long periods working overseas, so she lives there for only about 33% of the days in the first year and 42% in the second. Her adult daughter lives there 100% of the days in both years, and the IRS concludes the home “is considered a ‘residence’ of BUYER for 2017 and 2018.” The lesson for a retiree who buys a place for a relative: the family clause matters, and the plan must exist at closing.

No form is filed to claim the exception. That is also its risk. A buyer who does not withhold on the strength of the exception but then does not live there enough is liable for the failure to withhold, if the foreign seller did not pay the full U.S. tax on the gain. The only escape in the regulation is a change in circumstances that could not reasonably have been anticipated at the time of the transfer. The exception is also lost whenever the buyer of record is not an individual, “even if the property is acquired for or on behalf of an individual who will use the property as a residence” (Treas. Reg. 1.1445-2(d)(1)).

How the buyer protects itself before closing

The cheapest protection is paper. Treas. Reg. 1.1445-2(b)(1) says that a transferee that obtains the seller’s certification of non-foreign status “must retain that document for five years,” and that obtaining it excuses the buyer from the liability in section 1445. A valid Form W-9 counts as the certification (1.1445-2(b)(2)(v)). The same regulation prints a sample for an individual: the seller states that he or she is not a nonresident alien, gives a U.S. taxpayer identifying number and a home address, and signs under penalties of perjury.

Four limits are in the same rule.

1. No duty to ask, but a cost to not asking. The regulation says a buyer is not required to obtain a certification and may use other means to learn the seller’s status. If it relies on other means and the seller was in fact a foreign person, the buyer is liable. A buyer may demand a certification and, if it is not given, may withhold.
2. Knowledge defeats the paper. Under 1445(b)(7), a certification does not help a buyer that has actual knowledge it is false, or that gets a notice of falsity from an agent.
3. A late warning still costs. If the buyer learns after closing that the certification was false, it can rely on it only for consideration already paid. It must withhold the full 15% from consideration still to be paid, if possible (Treas. Reg. 1.1445-2(b)(4)(iv)).
4. Agents are in the chain. A title company or attorney that closes the sale can hold the affidavit and give the buyer a statement that it has it (1445(b)(9)). An agent’s liability for missing a false affidavit is capped at the compensation it derives from the transaction (1445(d)(2)(B)).

What if the buyer never withholds? Treas. Reg. 1.1445-1(e)(1) says the buyer “may be held liable for the payment of the tax and any applicable penalties and interest.” If the seller’s own tax is later satisfied, for example by filing a return that shows the tax paid or by an IRS certificate showing zero tax, the tax itself is not collected from the buyer, but interest under section 6601 still is (1.1445-1(e)(3)). The Form 8288 instructions add that willful failure to collect and pay over carries a penalty of up to $10,000 under section 7202.

Filing: Form 8288, Form 8288-A and the 20-day clock

The Instructions for Form 8288 (revised January 2026) state the deadline in one sentence: “A transferee must file Form 8288 and transmit the tax withheld to the IRS by the 20th day after the date of transfer.” The clock starts on the date of transfer, which Treas. Reg. 1.1445-1(g)(8) defines as the first date on which consideration is paid or a liability is assumed. An earnest money deposit that is forfeitable if the contract fails does not start it. For a closing on October 30, 2026, the 20th day is Thursday, November 19, 2026 (our arithmetic).

If you do not have the seller’s taxpayer identification number, file anyway. The instructions say you “must still file Forms 8288 and 8288-A,” but the IRS will not give the seller a stamped copy until a TIN is supplied. Penalties under section 6651 apply to a late filing and a late payment. Installment sales are handled by withholding the full amount at the first installment; if that payment does not include enough cash, the instructions point to a withholding certificate.

Form 8288-B: the certificate that lowers or cancels the withholding

Withholding is a share of the price, and the seller’s real tax can be far lower, or zero. The law has an answer: at the request of the seller or the buyer, the IRS determines the seller’s maximum tax liability, and withholding cannot exceed it (26 U.S.C. 1445(c)(1)). The IRS also may prescribe a reduced amount, and “The Secretary shall take action with respect to any request described in subparagraph (A) within 90 days after the Secretary receives the request” (1445(c)(3)(B)). Form 8288-B is the application form for many of these requests, and either side can file it; the IRS FAQ 10 says a buyer may want to when it knows a reduced or zero rate applies and wants to avoid the work of withholding and filing.

The instructions say what it does not do to the timeline: “You must withhold even if an application for a withholding certificate is or has been submitted to the IRS on the date of transfer.” What changes is the due date. The buyer does not file Form 8288 until the 20th day after the day the IRS mails the certificate or a denial. If the real purpose of the application was to delay payment, interest and penalties run from the 21st day after the transfer. If the certificate eliminates the withholding, no Form 8288 is needed; if it only reduces it, the buyer files and attaches the certificate.

Two situations come up often with U.S. rental buyers. A foreign seller who owned the home as a main residence may qualify for the section 121 home-sale exclusion, in which case the IRS says statutory withholding on the sale price can exceed the maximum tax, and the seller can ask for a certificate (IRS FAQ 5; Treas. Reg. 1.1445-3(b)(5)). The notice-of-nonrecognition shortcut does not work there: the Form 8288 instructions say a notice of nonrecognition “cannot be used for the exclusion from income under section 121” nor for incomplete 1031 exchanges, so the IRS certificate is required. Our guides to the section 121 exclusion and to 1031 exchange rules cover the seller’s side. The IRS says it will normally act within 90 days of a complete application, and a seller who needs an ITIN can send Form W-7 with it (IRS FAQ 13), so a certificate cannot be assumed for a closing in a few weeks.

Where crowdfunding and REIT interests fit

Most investors in our lane never buy a house from a foreign seller, but the same section reaches pooled vehicles. The Form 8288 instructions say a U.S. real property interest does not include “An interest in a domestically controlled QIE,” and a qualified investment entity includes any REIT. A buyer of a foreign partner’s interest in a partnership whose gross assets are at least 50% real property interests (and at least 90% real property plus cash) must withhold 15% of the amount realized, unless a general partner gives a signed statement that the tests are not met. If you are buying such an interest or an LLC stake from a foreign holder, the same 20-day clock applies. For how non-U.S. investors use platforms, see our guide for international investors and the foreign-national mortgage guide; for the tax side of the platforms themselves, see real estate crowdfunding taxes and the capital gains guide for real estate.

What a reader can do with this

1. Ask for the certification at the contract stage, not at closing. Put a W-9 or non-foreign certification in the contract checklist. A buyer who has it, and has no reason to doubt it, has no 1445 liability (Treas. Reg. 1.1445-2(b)(1)).
2. Decide the residence question on paper. If you will rely on the $300,000 exception or the 10% band, write down who will live there and for how long, and buy in an individual’s name. An LLC buyer is at 15% (Treas. Reg. 1.1445-2(d)(1)).
3. Count the loan. If you take over a mortgage, add it to the price before you use the $300,000 and $1,000,000 lines (Treas. Reg. 1.1445-1(g)(5)).
4. Put the filing on the calendar the day you sign. Count 20 days from the first payment other than earnest money, and mark the date for Form 8288 and the check (Treas. Reg. 1.1445-1(c)(1), (g)(8)).
5. If the seller says the tax will be far lower, ask them to file Form 8288-B early. The IRS has 90 days, and withholding at closing is still required while the application is pending.

This is a decision with a deadline and personal liability, and the professionals who can read the contract and the closing statement are a tax attorney or CPA and a licensed closing agent. An adviser match is not a substitute for any of them; the box below is a referral to financial advisers, for readers who also want to look at how a purchase or a large sale fits into the rest of their portfolio.

FAQ

Sources, read and saved on October 22, 2026: 26 U.S.C. 1445 (Legal Information Institute, Cornell Law School); Treas. Reg. 1.1445-1, 1.1445-2 and 1.1445-3 (Legal Information Institute, Cornell Law School, 26 CFR); the IRS page “FIRPTA withholding” (last reviewed July 21, 2026); and the Instructions for Form 8288 and Form 8288-A (revised January 2026) on irs.gov. We could not retrieve the instructions for Form 8288-B from irs.gov on that date, so the Form 8288-B discussion rests on the statute, the regulation, the Form 8288 instructions and the IRS FIRPTA page. Every closing price, split of ownership and dollar amount of withholding is a hypothetical or our arithmetic. This is analysis of public documents, not investment, legal or tax advice.