Sirius Tax Group LLC

FIRPTA Compliance for Foreign Property Sales: A Tax Professional's Guide

As tax professionals, real estate attorneys, and advisors, understanding FIRPTA (Foreign Investment in Real Property Tax Act) is essential for serving international clients and protecting your practice.

**The Fundamentals:**
FIRPTA requires withholding when foreign persons sell U.S. real property interests. The standard rate is 15% of gross sales price, though rates vary based on property type and sale price:

• Residential property ≤$300,000: No withholding (if buyer occupies as primary residence for 50%+ of first two years)
• Residential property ≤$1,000,000: 10% withholding (if buyer intends primary residence use)
• Property >$1,000,000 or investment property: 15% withholding

**Critical Compliance Steps:**
The withholding agent (typically the buyer or closing agent) must file Form 8288 within 20 days of transfer. Form 8288-A must be prepared for each foreign seller and serves as proof of withholding for tax credit purposes. Foreign sellers can reduce or eliminate withholding by filing Form 8288-B before closing.

**Real-World Application:**
At Sirius Tax Group, we've successfully guided foreign nationals through FIRPTA compliance and ITIN applications for property sales. Recent clients from Asia and the Middle East both obtained ITINs and are receiving their withholding refunds—a testament to comprehensive, culturally sensitive advisory.

**Why This Matters:**
Many foreign nationals overlook FIRPTA requirements or lack access to expert guidance. Tax professionals who specialize in international clients gain competitive advantage and build client loyalty by providing clear, proactive FIRPTA counsel.

If you're looking to expand your international tax practice or need FIRPTA guidance for clients, let's connect.

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