FIRPTA Primary Residence $300,000 Exception Explained (2026)

If you are selling U.S. property and are considered a foreign person for tax purposes, FIRPTA usually requires 15% of the sale price to be withheld at closing.

However, there is an important exception for certain transactions under $300,000.

In this guide, we explain how the $300,000 FIRPTA primary residence exception works in 2026, when it applies, and what both buyers and sellers need to understand before closing.

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What Is the $300,000 FIRPTA Exception?

Under FIRPTA rules, withholding may not be required if:

• The sale price is $300,000 or less, and
• The buyer intends to use the property as a primary residence

If both conditions are satisfied, the buyer may not be required to withhold 15% of the sale price.

This exception can significantly affect how much cash the seller receives at closing.

For a complete overview of FIRPTA rules, see our full guide:
FIRPTA Explained (2026): Complete Guide for Foreign Sellers of U.S. Property.

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Who Must Meet the Conditions?

The key factor in this exception is the buyer’s intended use of the property.

The buyer must:

• Plan to use the property as a primary residence, and
• Reside in the property for at least 50% of the days it is used during each of the first two 12-month periods after transfer

If the buyer intends to use the property as a rental, investment, or vacation home, the exception does not apply.

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Important: The $300,000 Threshold

The exception only applies if the total sale price is $300,000 or less.

If the sale price is even $300,001, the exception generally does not apply, and FIRPTA withholding rules must be followed.

Example 1: Sale Price $280,000

Sale price: $280,000
Buyer intends to occupy as primary residence

Result: FIRPTA withholding may not be required.

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Example 2: Sale Price $350,000

Sale price: $350,000
Buyer intends to occupy as primary residence

Result: Exception does NOT apply because price exceeds $300,000.

In this case, standard FIRPTA withholding rules would apply.

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What Does the Buyer Have to Certify?

The buyer must provide a written certification stating that:

• They intend to use the property as a primary residence, and
• They meet the occupancy requirement

This certification is typically handled during closing and included in transaction documentation.

Sellers should confirm with the closing agent or escrow company that proper documentation is completed.

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Does the Exception Eliminate Tax?

No.

The $300,000 exception only eliminates the withholding requirement.

It does not eliminate potential capital gains tax.

If the seller has a tax liability, it must still be addressed when filing a U.S. tax return.

To understand how withholding and final tax differ, review the complete FIRPTA overview here:
FIRPTA Explained (2026): Complete Guide for Foreign Sellers of U.S. Property.

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Common Misunderstandings About the $300,000 Rule

1. “If it’s my primary residence, FIRPTA doesn’t apply.”

Incorrect.
The exception depends on the buyer’s intended use, not the seller’s past use.

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2. “If the price is close to $300,000, it’s probably fine.”

Incorrect.
The threshold is strict. Exceeding $300,000 generally removes eligibility.

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3. “Green card holders don’t need to worry.”

Residency status determines whether FIRPTA applies at all.
If the seller is not considered a foreign person, FIRPTA may not apply in the first place.

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4. “The closing agent automatically handles everything.”

While closing agents are familiar with FIRPTA, sellers should confirm:

• Whether the exception applies
• Whether buyer certification is completed
• Whether proper documentation is retained

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What If the Buyer Later Rents the Property?

If the buyer falsely certifies intent to use the property as a primary residence and later does not meet the occupancy requirement, the buyer could face tax consequences.

Sellers are generally not responsible if proper certification was obtained at closing.

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How This Exception Impacts Cash to Close

Consider the difference:

Without Exception

Sale price: $290,000
FIRPTA withholding (15%): $43,500

Seller receives significantly less at closing.

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With $300,000 Exception

Sale price: $290,000
Withholding required: $0

Seller receives full proceeds (subject to other closing costs).

For foreign sellers in lower-price markets, this exception can materially change liquidity at closing.

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When Should Sellers Verify Eligibility?

Before listing the property, sellers should:

• Confirm whether they are considered a foreign person for tax purposes
• Estimate expected sale price
• Discuss with escrow or closing agent how FIRPTA will be handled

Planning early avoids last-minute surprises.

For a full breakdown of FIRPTA rules, withholding mechanics, and refund timelines, review:
FIRPTA Explained (2026): Complete Guide for Foreign Sellers of U.S. Property.

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Frequently Asked Questions (2026)

Does the $300,000 exception apply to rental properties?
No. The buyer must intend to use the property as a primary residence.

What if the sale price is exactly $300,000?
If the sale price is $300,000 or less and other requirements are met, the exception may apply.

Does the seller need to file anything to claim this exception?
Typically, the buyer provides certification. The closing agent manages documentation.

Does this exception remove capital gains tax?
No. It only removes the withholding requirement.

What if multiple buyers purchase the property?
The intended occupancy of the buyer(s) must satisfy IRS requirements.

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Final Thoughts

The $300,000 FIRPTA primary residence exception can significantly impact how much money a foreign seller receives at closing.

However, eligibility depends strictly on:

• Sale price
• Buyer intent
• Proper certification

Sellers should confirm qualification early and ensure documentation is properly handled at closing.

Understanding FIRPTA in advance reduces risk and improves financial planning.

For a complete overview of FIRPTA rules, see our full guide:
FIRPTA Explained (2026): Complete Guide for Foreign Sellers of U.S. Property.

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