closing
FIRPTA
The Foreign Investment in Real Property Tax Act (FIRPTA) is a federal law requiring a buyer to withhold a percentage of the amount realized, generally 15 percent, when buying U.S. real estate from a foreign person, and remit it to the IRS. Exceptions and reduced rates may apply, such as for certain lower-priced homes the buyer will live in. The closing agent usually handles withholding.
- Exam tip
- The buyer, not the seller, is responsible for withholding under FIRPTA. Sellers who are U.S. persons usually sign a non-foreign affidavit to avoid withholding.
- Example
- A foreign seller sells a rental condo for $600,000. Unless an exception applies, the buyer withholds 15%, or $90,000, and sends it to the IRS.
Related terms & state variants
Sources
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Last verified: 2026-10-23