Selling US Property as a Foreign Owner: What You Net

A non-resident selling US property meets a number most owners have not modelled: 15% of the gross sale price withheld at closing under FIRPTA — not 15% of the profit, 15% of the price. On a $2 million sale that is $300,000 leaving the closing table for the IRS regardless of whether the sale produced a gain at all.

It is recoverable, and it is manageable in advance. But it has to be planned for rather than discovered. Let's work through the exit in order.

1. What FIRPTA Actually Does

The Foreign Investment in Real Property Tax Act requires a buyer to withhold on the purchase of US real property from a foreign person, generally at 15% of the gross sale price, and remit it to the IRS. The buyer bears the obligation, which is why closings enforce it strictly.

The withholding is a payment on account, not the tax itself. The actual liability is computed on the gain, and the difference between the two is refunded when a return is filed for the year of sale — which means the following filing season, not at closing.

Note the cash flow problem this creates. A seller planning to reinvest the proceeds immediately has materially less at closing than a naive calculation suggests — our FIRPTA guide sets out the mechanics in full.

2. Reducing the Withholding Before It Happens

Where the expected tax is less than 15% of the price — which is common, since tax applies to the gain rather than the price — a seller may apply to the IRS for a withholding certificate authorising a reduced amount.

The application must be made before or at closing, and processing takes time. Sellers who start the application after accepting an offer frequently find the closing arrives first, at which point the full 15% is withheld and the money is recovered only through the return.

Two prerequisites make the whole process work: an ITIN obtained well in advance, and clean records of the purchase price, capital improvements and depreciation claimed. Without those, neither the certificate application nor the return can be prepared efficiently.

3. The Rest of the Seller's Bill

FIRPTA sits on top of ordinary selling costs, which in New York run 8-10% of the sale price: brokerage commission, New York City transfer tax at 1.425% above $500,000, New York State transfer tax at 0.4%, attorney fees, and building or managing agent charges.

Then the tax computation itself. The gain is the sale price less adjusted basis and selling costs, and depreciation claimed during ownership is recaptured — which raises the taxable amount above the simple difference between what you paid and what you sold for.

Owners who never filed US returns during ownership face a harder computation, because deductions and depreciation records may be incomplete. Our capital gains article covers how the gain is calculated.

The records that decide your basis

Basis is what you paid plus capital improvements, and every dollar of documented improvement reduces the taxable gain. Kitchen and bathroom renovations, system replacements, structural work — all of it counts, and all of it needs invoices rather than recollection.

Owners who kept a folder from day one recover materially more than owners reconstructing a decade of work from memory and bank statements. Keep contractor invoices, permits and payment records for as long as you own the property, and store them somewhere that survives a change of accountant.

Currency, and what you actually receive

For an owner converting proceeds back to a home currency, the exchange rate at closing is part of the return whether or not it was ever modelled. A property that appreciated 20% in dollars can return less in home-currency terms if the dollar weakened over the holding period, and more if it strengthened.

This is worth naming before listing rather than after settlement, because it occasionally changes the timing decision. Where the sale is discretionary, the currency position is a legitimate input alongside the property market itself.

4. The Counterargument: Should You Sell at All?

Given the exit friction — 8-10% in costs, 15% withheld, a refund arriving a year later — some owners conclude they should simply hold. The argument has weight: a property that covers its costs and is not needed as capital does not have to be sold on any particular schedule.

The rebuttal is that holding is also a decision with consequences. US estate tax exposure for non-residents begins above a $60,000 exemption on US-situs assets, so an unsold property is an unresolved estate question. And for investment property, a 1031 exchange can defer the gain entirely by rolling into another US property — which is a third option most owners weighing sell-or-hold never price.

The exchange has strict deadlines — 45 days to identify and 180 days to close — and must be set up before the sale closes, not after. Our 1031 guide covers the rules, and the estate tax guide covers the exposure on the other side of the decision.

Note that an exchange and FIRPTA interact rather than cancel each other. A foreign seller rolling into a replacement property still meets the withholding rules, and the coordination between the qualified intermediary, the closing attorney and any withholding certificate application has to be arranged in advance. It is workable and it is not automatic.

Final Thoughts: Plan the Exit at the Purchase

Everything that makes a foreign owner's exit expensive is decided years earlier: whether an ITIN exists, whether returns were filed and depreciation tracked, whether the holding structure suits the disposal, and whether anyone applied for a withholding certificate in time. None of it can be fixed in the last month.

A reasonable sequence for a discretionary sale: confirm the ITIN is current, assemble the improvement records, have the CPA estimate the actual tax on the expected price, decide whether a withholding certificate is worth applying for, and only then instruct the listing. That order costs nothing and routinely improves the net.

We coordinate sales for non-resident owners alongside their CPA, including withholding certificate timing and exchange planning, with brokerage services provided through licensed professionals. Talk to our team before you list, not after you accept an offer.

Reinvent NY provides business consulting, operational support, and coordination services. Legal advice and immigration filings are handled by independent licensed attorneys. Real estate services are provided through licensed professionals and applicable brokerage relationships. This article is for informational purposes only and does not constitute legal or investment advice.

More on US property tax: NYC Condo Closing Costs for Buyers, 1031 Exchange in 2026, CEMA Loans in New York.