Real estate glossary
FIRPTA
Also called: Foreign Investment in Real Property Tax Act, FIRPTA withholding
A federal rule that may require withholding part of the sale price when the seller is a foreign person; most sellers just certify they are not.
FIRPTA is a federal law covering sales of U.S. real estate by foreign persons. When it applies, the buyer is generally required to withhold 15% of the amount realized and send it to the IRS, usually handled through escrow. Reduced rates and exemptions apply to some lower-priced homes the buyer will live in.
Most sellers who are U.S. citizens or residents simply sign a certification of non-foreign status during escrow. California separately requires withholding on some sales (generally 3⅓% of the price) unless an exemption applies — for example, selling your principal residence.
What it means for you as a seller
Fill in the FIRPTA and state withholding forms carefully when escrow sends them. If you are not a U.S. person, talk to a tax professional early — withholding can affect your closing funds.
Related terms
Not legal or tax advice. These explanations are general information to help you follow your own transaction. Laws, forms and customs vary by state and county, and the terms of your own contract always control. For advice about your situation, talk to your real estate agent, a real estate attorney or a tax professional. Last updated .