The buyer’s intended use and the whole transaction matter before you calculate a rate.
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For an ordinary foreign-seller real estate sale, federal FIRPTA withholding is generally 15% of the amount realized. Qualifying buyer-residence purchases can have no withholding at 300,000 U.S. dollars or less, or 10% above that amount through one million U.S. dollars.IRSIRS Withholding is a payment toward tax, not the final gain calculation.
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Get help reviewing the closing and withholding records. FIRPTA refunds start at US$499 and include the ITIN application if you need one.
Claim back tax withheld when you sold U.S. property.
Includes:
A closing statement contains several numbers that can sound like the sale proceeds. The buyer's payment, the mortgage payoff and the balance wired to you have different jobs. Begin by identifying the amount realized under the federal rule before multiplying anything by a withholding percentage.
The IRS includes cash, the value of other property transferred and liabilities assumed or remaining attached to the property in that amount.IRS A mortgage balance does not simply turn a high-value sale into a low-value sale for the residence threshold.
Put the contract price, mortgage information and closing adjustments beside each other. Ask the closing team which figure it is using and why. If the transaction includes furniture or another separate interest, describe that item to the reviewer instead of quietly removing it from the total.
Your final income tax involves a separate gain calculation. Keep the acquisition records and property-use history for that work. A percentage applied at closing cannot answer how much tax you ultimately owe, even when the closing arithmetic itself is correct.
The residence exception turns on the buyer's intended use, not on whether you called the property your home. A holiday apartment that you used personally could be bought as a rental investment. Conversely, a property you rented out could be acquired by an individual for qualifying residence use.
The IRS test requires definite plans for the buyer or a family member to live there for at least half of the days the property is used by anyone in each of the first two twelve-month periods after transfer. Vacant days do not enter that count.IRS A building's residential appearance alone is not enough.
Give the intended-use question to the buyer and the withholding agent before closing. Keep the response with the transaction papers. Do not write your own assumption into the file because you saw a family tour the house or because the listing used the word residence.
An entity buyer raises a different eligibility question from an individual buying a home. The no-withholding residence exception specifically requires an individual buyer.IRS Ask the reviewer to check the actual purchaser named in the contract, including changes made shortly before closing.
These examples assume an ordinary direct real estate sale, a wholly foreign individual seller and no separate certificate or exemption. They explain withholding arithmetic only. They do not calculate capital gains tax or a refund.
At the lower threshold: an amount realized of 300,000 U.S. dollars can qualify for no withholding when the individual buyer meets the residence conditions. The same amount with an investment buyer does not obtain that residence exception; the general 15% would be 45,000 U.S. dollars.IRSIRS
Between the thresholds: a qualifying residence purchase with an amount realized of 800,000 U.S. dollars has 10% withholding, or 80,000 U.S. dollars. If the required residence use is absent, the general 15% would instead be 120,000 U.S. dollars.IRS The rate applies to the relevant amount, not only to the part above the lower threshold.
At and above one million: qualifying residence use can support 10% at exactly one million U.S. dollars. An amount realized of 1,200,000 U.S. dollars falls above that reduced-rate ceiling, so ordinary 15% withholding is 180,000 U.S. dollars even if the buyer plans to live there.IRS
Check the real documents before borrowing one of these examples. Ownership, an IRS certificate, an entity transaction or another exception can change the result. Do not choose an example merely because its wire amount resembles the amount you expect to receive.
List all sellers and establish each one's U.S. tax status. Citizenship, mailing address and the name on a bank account are not a substitute for that review. The buyer needs to know which owner is foreign for the withholding rule.
The IRS allocates the amount realized using the sellers' capital contributions; its guidance treats a husband and wife as contributing half each. Withholding is applied to the amount allocated to foreign sellers.IRS You cannot place the entire sale on a U.S. spouse simply to avoid the foreign spouse's withholding.
For example, suppose spouses own a property and only one is foreign. Have the closing preparer review the IRS allocation rule against the actual ownership and transaction. The residence threshold still needs review for the property transaction; do not automatically divide the sale price in half to claim the lower threshold.
Check the identity and credit records for each foreign owner. A shared closing statement does not remove the need for each seller's withholding evidence. Save the allocation calculation so the later individual returns can be checked against what was reported at closing.
If normal withholding appears much larger than the supported tax liability, review a withholding certificate before the transaction closes. That review uses the gain evidence and tax calculation, rather than an informal request to use a preferred rate.
Form 8288-B is used for specified certificate categories, including a maximum-tax-liability calculation.IRS The IRS must receive enough information to review the claim. Follow the certificate packet guide for the records to gather.
Once the property has sold, establish where the withholding is held. Funds retained by the withholding agent and funds already sent to the IRS present different next steps. Bring the certificate correspondence, remittance evidence and Forms 8288 or 8288-A to the review instead of assuming the closing company can always wire the difference back.
A refund is based on an overpayment after the tax is calculated and the credit is established. A lower profit does not by itself produce a refund of every amount withheld. Keep the purchase and rental records with the sale documents so the return can explain both sides of that comparison.
Ask for an itemized closing statement that identifies the FIRPTA amount. Local transfer charges, property-tax adjustments, state withholding and federal withholding should not be treated as a single tax balance. The correct agency and form matter when you seek a credit or review a payment.
The buyer generally reports and pays ordinary FIRPTA withholding within twenty days after transfer, subject to the timely pending-certificate rule.IRS Keep the transfer date and submission record visible; a later IRS correspondence date does not necessarily change the year in which you sold the property.
Confirm which records you will receive after remittance. For an individual foreign seller, the final return review needs the sale-year tax documents as well as the withholding proof. An ITIN may identify the seller, but it does not decide the withholding rate or the amount of final tax.
Use the contract and liability information, rather than your expected net wire.
AmountReview residence plans and the purchaser’s identity before claiming threshold relief.
UseEstablish each seller’s tax status and the relevant ownership allocation.
OwnersCheck a certificate or the final-return credit with the actual tax records.
ReviewDo not use the net wire amount for the test. The IRS amount-realized definition includes relevant liabilities.IRS
No. Withholding and the final income-tax calculation are different.IRS
No. IRS guidance requires an allocation among owners and applies withholding to the foreign owners’ amount.IRS
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Every IRS fact on this page comes from IRS.gov or the other official pages listed below and was checked on October 3, 2026. Nolly.com's own prices are the only exception. Nolly.com is a private company and is not part of the IRS.
Nolly Services Inc, d/b/a Nolly.com, appears on the IRS page Acceptance agents – Canada. Nolly.com is a private company and isn't part of the IRS.
Checked against IRS.gov on October 3, 2026. General information, not tax advice.
Start with the documents and the federal tax purpose.
