FIRPTA is withholding on certain foreign-person dispositions of U.S. real property, not a final calculation of capital-gains tax. Have a qualified tax professional determine the applicable rule before closing.
Reviewed and corrected October 5, 2026. Original publication date retained.
Start with status and amount realized
IRS FIRPTA guidance states a general 15% withholding rate and defines amount realized to include more than simply the seller’s net proceeds. The buyer generally has withholding responsibilities.
Residence exceptions require actual conditions
IRS exception guidance provides a residence exception when amount realized is not more than $300,000. The individual buyer or a family member must have definite plans to reside there for at least 50% of days the property is used by any person during each of the first two 12-month periods after transfer. Vacant days are not counted.
Do not rely on a label
Calling a home an investment, vacation property or primary residence does not by itself apply the IRS test. Mixed-use plans require tax review. Ask the closing team to document the applicable rate, any certificate request and the current reporting/payment deadlines.
Withholding and final tax are different
The IRS describes Form 8288-B requests for a withholding certificate allowing reduced or no withholding where appropriate. Do not assume a requested certificate is approved or that a withholding amount equals final tax liability.
Frequently Asked Questions
Is withholding automatically 15% in every sale?
No. Exceptions and other rules can apply; obtain a transaction-specific determination.
Does ordinary vacancy count as residence use?
No. The IRS residence-use test excludes vacant days from the days used.
Talk with our team
Contact MVP Home Group to discuss the property and the next step that fits your plans. For legal, tax, loan or insurance questions, obtain advice from the appropriate qualified professional.
About MVP Home Group
Nelson Cruz, P.A. is the Founder & CEO of MVP Home Group, brokered by Real Broker LLC. He brings nearly two decades in law enforcement to his work in real estate. Contact our team through Nelson’s profile.