FIRPTA
Real estate · Reinvent NY glossary
The Foreign Investment in Real Property Tax Act requires that when a foreign person (non-US tax resident) sells US real property, the buyer must withhold 15% of the gross sale price and remit it to the IRS. For a $1 million sale, $150,000 is withheld. The foreign seller can recover overpayments by filing a US tax return (Form 1040-NR) — the actual tax owed is based on capital gains, not the full sale price. Withholding can be reduced by obtaining a Withholding Certificate (Form 8288-B) before closing. FIRPTA planning is essential for foreign investors to manage cash flow at sale time.
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