FIRPTA (Foreign Investment in Real Property Tax Act of 1980)

As a U.S. non-resident having disposed of, or in the process of disposing of, a U.S. property, your title or escrow agent, or realtor, likely informed you that the sale is subject to FIRPTA.

There are three reasons you’re researching FIRPTA:

You may be selling your U.S.
property in the near future.

You have your property
on the market.

You have sold your property.

You’re not sure what’s involved in the process, and you want to find out exactly what you need to do.

You’ve Come to the Right Place!

This site was created to help you understand the entire FIRPTA process. FIRPTA is quite complex and can cause you considerable stress. But with our guidance and collaboration, we can help you breathe easy. We’ll even do everything for you to make your life much easier.

FIRPTA Explained

Before 1981, U.S. residents paid taxes on the disposition of U.S. properties, while non-residents were generally exempt. According to the IRS, a disposition “includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc.”

FIRPTA (the Foreign Investment in Real Property Tax Act) was enacted in 1980 to treat these situations comparably and pay tax, with certain exemptions, on the disposition of U.S. property (real estate), including vacation property or vacant land, by U.S. non-residents.

The Buyer is the Withholding Agent

To ensure that tax is collected, the IRS designates the buyer as the withholding agent. The buyer is responsible for withholding tax, with certain exceptions, from the disposition if the seller is not a U.S. resident. The buyer will then remit the amount withheld to the IRS within 20 days of the disposition.

Steps for Non-Residents Selling U.S. Property

1.  Accepting an offer on your property.

2. Determining the withholding rate and any exemptions.

3. Completing and filing the required FIRPTA compliance forms.

4. Completing the applicable withholding forms.

5. Applying for an ITIN if you do not have one.

6. Calculating the amount of capital gain or loss on the sale.

7. Filing the U.S. federal, state, and tax returns of your country of residence

Learn More About the FIRPTA Steps

FIRPTA Withholding Rates & Exemptions

The withholding rate, exemptions, and reductions are determined by:

  • The buyer’s intention
  • The sale price
  • Proof that the amount withheld will be more than the taxes owing.
Learn About IRS Withholding Rates & Exemptions

IRS ITIN Number Requirements

The IRS requires that non-residents who need to file a U.S. tax return have an ITIN (Individual Taxpayer Identification Number). A U.S. tax return is required for the sale of property by a non-resident.

An ITIN is issued by the IRS to U.S. non-residents who:

  • Do not have a U.S. Social Security number.
  • Do not meet the requirements to obtain a Social Security number.
Learn how to apply for an ITIN

Income Tax for U.S. Non-Residents Selling U.S. Property

Once your sale is firm, you must do the following before filing your U.S. and resident country tax returns:

  1. Ascertain the rate of withholding tax on the proceeds of the sale. This will be withheld by the buyer, or the buyer’s agent, and remitted to the IRS.
  2. Submit all required withholding forms to the IRS.
  3. All non-residents who are required to file a U.S. tax return must have an ITIN (Individual Taxpayer Identification Number). You should apply for one after the closing of the sale, if you don’t have an ITIN.
  4. Determine the capital gain or loss on the sale.
Learn About U.S. Taxes

Our FIRPTA Services

Dealing with all the FIRPTA requirements can be a real challenge. Although the information on this site is very helpful for those who want to take on the challenge, there’s a strong chance that you’ll hit some obstacles or perhaps leave out some important steps.

Save yourself time, stress, and problems by having FIRPTA GLOBAL do the work. We’re FIRPTA experts who know all the detailed steps, and we enjoy helping sellers breathe easy.

Complete FIRPTA support from start to finish. We will:

File all required forms relating to FIRPTA.

Provide the title or escrow company with all required FIRPTA documentation.

Assist each seller of the property in obtaining an ITIN.

File the U.S. federal and state tax returns (if state income tax reporting is required).

Let FIRPTA GLOBAL Handle Your FIRPTA Needs

Our services can be provided virtually or in person. Contact us to start the process!

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