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E&F Accounting Group

FIRPTA

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FIRPTA Withholding

Foreign Investment in Real Property Tax Act (1980)

Our team of experts will help you find the best solution for your FIRPTA Withholding needs

Our services include:

  • FIRPTA Withholding Certificate
  • FIRPTA Remittance of Funds
  • Apply for an Individual Taxpayer Identification Number (ITIN)
  • Hard Case Resolution

    • Seller: Are you waiting for a refund?
    • Buyer: Are you dealing with an IRS penalty?

Questions to consider

  • What is FIRPTA?

FIRPTA is a Withholding that was designed by the Internal Revenue Service (IRS) to ensure foreign owners (person/company) of U.S. property pay taxes on the profits (gain) when they sell. FIRPTA is a withholding and not a tax.

  • Who is responsible for the Withholding?

The buyer/transferee must find out if the seller/transferor is a foreign person/company. If the seller is a foreign person and the buyer fails to withhold, the buyer may be held liable for the tax.

  • Who is considered a foreign Person?

A Foreign Person is a nonresident individual, foreign corporation that has not made an election under section 897(i) of the Internal Revenue Code to be treated as a domestic corporation, foreign partnership, foreign trust, or foreign estate.

  • What is considered a timely manner for FIRPTA Withholding?

FIRPTA Withholding funds must be submitted to the IRS within 20 days of closing. However, if a Withholding Certificate application has been submitted to the IRS before closing, the applicable withholding is not required to be paid over to the IRS until the 20 th day after the day that the IRS mails the Withholding Certificate or notice of denial. The IRS will normally act on an application within 90 days of receipt of all information necessary to make a proper determination.

  • What if funds are not submitted on time to the IRS?

Interest and penalties will be assessed beginning on the 21 st day after date of the transfer or by the 21 st day of the Withholding certificate date if an amount is due to the IRS. The buyer/transferor is responsible for penalties/interest.


Illustrative Chart-Withholding Percentage of Gross Sales Price

Intend to use as a Residence Sales Price is $300,000.00 or less Sales Price is between $300,000.00 & $1,000,000.00 Sales Price is over $1,000,000.00
Yes Exemption 10% withholding 15% withholding
No 15% withholding 15% withholding 15% withholding