If you are a nonresident alien living outside the United States and selling U.S. property, FIRPTA withholding likely applies to your transaction.
In 2026, the standard rule requires 15% of the gross sale price to be withheld at closing.
In this guide, we explain how FIRPTA applies to nonresident aliens living abroad, what to expect at closing, and how to plan for refunds.
If you are new to FIRPTA, begin here:
FIRPTA Explained (2026): Complete Guide for Foreign Sellers of U.S. Property.
Who Is Considered a Nonresident Alien?
For tax purposes, a nonresident alien is generally someone who:
- Is not a U.S. citizen, and
- Does not meet the Green Card Test, and
- Does not meet the Substantial Presence Test
If you live outside the United States and do not qualify as a U.S. tax resident, you are typically considered a foreign person under FIRPTA.
Does FIRPTA Automatically Apply?
In most cases, yes.
When a nonresident alien sells U.S. real property:
- 15% of the gross sale price must be withheld
- The buyer is responsible for withholding
- Forms 8288 and 8288-A must be filed
There are limited exceptions, such as the $300,000 primary residence exception, but most sales above that threshold trigger withholding.
For details on that exception, see:
FIRPTA Primary Residence $300,000 Exception Explained (2026).
How Withholding Works for Sellers Living Abroad
At closing:
- 15% of the sale price is withheld
- Funds are sent to the IRS
- Seller receives reduced proceeds
Example:
Sale price: $700,000
FIRPTA withholding (15%): $105,000
That $105,000 is sent to the IRS — not kept by the buyer.
Is 15% the Final Tax?
No.
The 15% is a prepayment.
After the sale, the nonresident seller must:
- File a U.S. tax return for the year of sale
- Report the capital gain
- Claim credit for FIRPTA withholding
- Receive refund if withholding exceeds actual tax
For refund timing expectations, read:
FIRPTA Refund Timeline: What to Expect in 2026.
Can Nonresident Aliens Reduce Withholding?
Yes.
If the actual capital gain is significantly lower than 15% of the sale price, the seller may apply for a reduced withholding certificate using Form 8288-B.
If approved, the IRS may authorize lower withholding before closing.
For step-by-step instructions, see:
Form 8288-B Explained (2026 Guide).
Do You Need an ITIN?
Yes.
If you do not already have a valid ITIN (Individual Taxpayer Identification Number), you will need one to:
- File a U.S. tax return
- Claim a refund
- Report capital gains
Applying for an ITIN can add processing time, so planning early is important.
Common Challenges for Sellers Living Abroad
1. Coordination Across Time Zones
Communication with escrow agents and tax professionals may require advance planning.
2. Documentation of Basis
Sellers must document:
- Original purchase price
- Improvement costs
- Closing costs
Missing documentation can increase taxable gain.
3. Refund Delays
Refunds may take months after filing a U.S. tax return.
Planning liquidity is essential.
What If You Already Left the U.S.?
Even if you:
- Sold your property after relocating
- No longer reside in the United States
You are still required to:
- Comply with FIRPTA
- File a U.S. tax return
- Report the sale properly
Leaving the country does not eliminate tax reporting obligations.
Frequently Asked Questions
Does FIRPTA apply if I inherited the property?
Yes. FIRPTA applies to the sale of U.S. real property interests regardless of how acquired.
Can I avoid FIRPTA by selling to a family member?
No. The rules apply based on seller status, not relationship.
What if the property is jointly owned?
Withholding is typically calculated proportionally based on ownership interest.
Do I still owe U.S. tax if I live abroad?
Yes. Nonresident aliens owe U.S. tax on gains from U.S. real property.
Can I receive refund outside the United States?
Yes, provided proper tax filing and documentation are completed.
Final Thoughts
For nonresident aliens living abroad, FIRPTA withholding is often unavoidable — but it is not necessarily the final tax.
Understanding the process allows sellers to:
• Estimate net proceeds accurately
• Plan for liquidity
• Reduce excessive withholding
• Avoid compliance issues
If you are preparing to sell U.S. property while living abroad, begin with the complete 2026 FIRPTA overview here:
FIRPTA Explained (2026): Complete Guide for Foreign Sellers of U.S. Property.
Important Disclaimer
This content is provided for general informational and educational purposes only. It does not constitute legal, tax, or financial advice.
While we aim to provide accurate and up-to-date information, U.S. tax laws, immigration rules, and lending guidelines are complex and subject to change. The examples and estimates discussed in this article are simplified and may not apply to your specific situation.
No professional relationship is created by reading this content. You should consult a qualified CPA, tax advisor, immigration attorney, or licensed professional before making any financial or legal decisions.
Immigrant Property Guide does not guarantee the accuracy, completeness, or applicability of the information provided.
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