Skip to main content
FIRPTA · After the sale

Sold your U.S. property? What happens to the FIRPTA withholding now

The withholding taken at closing is a prepayment of your U.S. tax on the sale, not the tax itself. To get credit for it — and back any part of it that exceeds the tax — you file a U.S. income tax return for the year of the sale with the evidence of withholding. Nothing is refunded automatically, and nothing should be assumed about the amount before the return is prepared.

By Danilson Ramos · Founder, Atamatax

Updated

Four steps, in this order

  1. Collect the evidence of withholding

    Form 8288-A is the buyer's statement of what was withheld on your share. When your taxpayer identification number is on it, the IRS stamps Copy B and sends it to you; that stamped copy is the evidence your return attaches. Keep the final settlement statement too.

  2. Settle your taxpayer number

    Without an ITIN or SSN on Form 8288-A there is no stamped copy. A return can then attach other substantial evidence of the withholding with a statement — but the number is needed for the return in any case, so it comes first.

  3. File the return for the year of the sale

    The sale is reported on a U.S. income tax return — for an individual nonresident, generally the nonresident return — and the withholding is claimed as a credit. That return is where the actual tax on the gain is computed.

  4. Recover what exceeds the tax

    If the tax on the gain is lower than what was withheld, the difference is refunded after the IRS processes the return. If it is higher, the balance is due. Neither is known before the return is prepared.

Withholding, tax and refund are three different numbers

The withholding was a percentage of the price. The tax is a percentage of the gain — what you received, minus what the property cost you, minus improvements and selling costs, adjusted for any depreciation while it was rented — at the rates that apply to you. The refund, if there is one, is the first number minus the second. A buyer who withheld $90,000 on a $600,000 sale from a seller with a $40,000 gain is holding far more than the tax on that gain; a seller with a $400,000 gain may owe more than was withheld. Either way, the return decides.

Taxes you pay at home on the same sale are a separate matter, handled under your own country’s rules and any tax treaty — a professional coordinates the two, but this page covers only the U.S. side.

If you want it handled

The Post-Closing Review is priced and scoped on its own, separately from any work done before closing: a qualified tax professional looks at the documents you have and those missing, the federal filings the sale may require, the evidence of withholding, and the possible refund routes. Preparing the return itself is a separate, quoted service. See the post-closing package and, if you have no taxpayer number yet, how ITINs work for sellers.

Questions

Common questions

What happens if my sale has already closed?
The withholding has been paid to the IRS on your behalf. It now sits as a credit you claim on a U.S. income tax return for the year of the sale. The return settles the actual tax; any excess withholding is refunded after it is processed.
Will I automatically get a refund?
No. Nothing comes back without a return, and whether anything comes back at all depends on the tax computed on your gain. A sale with a large gain can owe more than was withheld.
My Form 8288-A is not stamped. Is that a problem?
It usually means no taxpayer identification number was on it. The IRS then asks for the number; the return can still claim the credit with other evidence of the withholding, but expect more correspondence. Getting an ITIN is the first step.
Nothing was withheld at closing, but I am a foreign seller. What now?
That needs a professional's look rather than a template: whether an exception was properly applied, whether the buyer relied on a certification, and what the return should show. Do not assume either that you owe nothing or that the buyer will pay.

Start with what you have

The situation check has an after-closing branch: what was withheld, which documents you hold, whether a return is filed — and what is missing.

Check my sale after closing

Authorities cited

Primary sources (Cornell Legal Information Institute for the US Code and CFR; IRS.gov for forms, procedures, and treaty documents). This page is general information, not individualized tax or legal advice.

Atamatax provides tax preparation support and educational resources. This website does not constitute legal or tax advice.