Can FIRPTA withholding be reduced before closing?

Sometimes. The buyer-residence rules can lower the rate to 10% or remove it in some home sales, and a withholding certificate can set a lower amount when the withholding would exceed the seller's maximum tax. Neither is automatic: the residence rules depend on the buyer's plans, and a certificate is decided by the IRS on an application.

If we apply before closing, does the buyer still withhold?

Yes. With an application pending on the date of transfer, the buyer still withholds at closing, but files Forms 8288 and 8288-A and pays the money by the 20th day after the IRS mails its decision. The seller has to tell the buyer in writing that an application was made, on the day of the transfer or the day before.

How long does the IRS take?

The IRS says it generally acts within 90 days of receiving a complete application — and complete includes the taxpayer identification number of every party. That is the IRS's own target, not a promise anyone can make for you, and an incomplete file restarts the wait.

What if the sale has already closed?

Then the withholding has normally been paid over already. Recovering what exceeds your actual tax usually happens on your U.S. return for the year of the sale, which claims the withholding as a credit. A professional looks at whether any earlier route is available on your facts.

Do I need an ITIN to apply?

A complete application needs a taxpayer identification number for each party. A seller without one can file Form W-7 together with the Form 8288-B under the ITIN rules' FIRPTA exception.

FIRPTA · Form 8288-B

Can FIRPTA withholding be reduced? The withholding certificate, explained

A withholding certificate is the IRS’s written decision that a smaller amount — sometimes nothing — should be withheld on your sale. You (or the buyer) apply on Form 8288-B. It is worth preparing when the standard withholding is clearly more than the tax the sale could produce. The IRS decides; a qualified professional prepares the application and computes the figure it rests on.

By Danilson Ramos · Founder, Atamatax

Updated October 2026

Three grounds the IRS recognises

The withholding would exceed the maximum tax

The common one. If 15% of the price is more than the most tax the sale could produce — a small gain, a break-even, a loss — the IRS can certify a lower amount. The application carries a computation of that maximum tax liability, built from the purchase price, improvements, selling costs and any depreciation.

The gain is exempt, or a nonrecognition rule applies

Some transfers produce no taxable gain under the Code or a treaty, or defer it. Whether a nonrecognition rule really applies is a professional's judgement, and sometimes a written notice to the buyer is the route instead of a certificate.

An agreement to pay the tax

For example in a seller-financed sale, where the full withholding would otherwise be due at the first instalment. An agreement with the IRS, with security for the tax, can set a different arrangement.

What an application changes at the closing table — and what it does not

Applying does not remove the withholding at closing. With a complete application pending on the transfer date, the buyer still withholds, but files Forms 8288 / 8288-A and pays by the 20th day after the IRS mails its decision.
The seller tells the buyer in writing that an application was made — on the day of the transfer or the day before.
The IRS generally acts within 90 days of a complete application, and complete includes the taxpayer identification number of every party. That is the IRS's target, not a guaranteed time.
A pending application does not release the withheld amount to the seller at closing.

In practice that means the cash you receive at closing is usually the same whether or not an application is pending: the difference is that the withheld amount waits with the withholding agent instead of going straight to the IRS, and the part the certificate does not require is released afterwards. Planning around that delay is part of the work.

What a professional needs to prepare one

The sale contract and the estimated settlement statement — the price, the parties and the closing date.
What you paid: the purchase closing statement, or for an inherited property a valuation as of the date of death.
Improvements: invoices for additions and renovations, not repairs.
Rental history and any depreciation claimed on earlier U.S. returns.
Each party’s taxpayer identification number status — or a Form W-7 to file alongside (see ITINs for sellers).

Atamatax’s Withholding Certificate Service builds the basis and maximum-tax-liability workpapers from those records, has a qualified tax professional review and prepare the Form 8288-B where they conclude it is appropriate, and coordinates with the closing parties while it is pending. You sign as the applicant. The package terms list exactly what is included.

Questions

Common questions

Can FIRPTA withholding be reduced before closing?: Sometimes. The buyer-residence rules can lower the rate to 10% or remove it in some home sales, and a withholding certificate can set a lower amount when the withholding would exceed the seller's maximum tax. Neither is automatic: the residence rules depend on the buyer's plans, and a certificate is decided by the IRS on an application.
If we apply before closing, does the buyer still withhold?: Yes. With an application pending on the date of transfer, the buyer still withholds at closing, but files Forms 8288 and 8288-A and pays the money by the 20th day after the IRS mails its decision. The seller has to tell the buyer in writing that an application was made, on the day of the transfer or the day before.
How long does the IRS take?: The IRS says it generally acts within 90 days of receiving a complete application — and complete includes the taxpayer identification number of every party. That is the IRS's own target, not a promise anyone can make for you, and an incomplete file restarts the wait.
What if the sale has already closed?: Then the withholding has normally been paid over already. Recovering what exceeds your actual tax usually happens on your U.S. return for the year of the sale, which claims the withholding as a credit. A professional looks at whether any earlier route is available on your facts.
Do I need an ITIN to apply?: A complete application needs a taxpayer identification number for each party. A seller without one can file Form W-7 together with the Form 8288-B under the ITIN rules' FIRPTA exception.

Is a certificate worth it on your figures?

The situation check compares the standard withholding with a rough tax on your gain and tells you whether a professional's look is worthwhile — a screen, never a promise.

Screen my sale for a certificate

Authorities cited

IRS: withholding certificates — IRS — Withholding certificates (grounds, the 90-day target after a complete application, notice to the transferee)
Form 8288-B — Form 8288-B — Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
Instructions for Form 8288 — Instructions for Form 8288 (Rev. 01/2026) — rates, the 20-day filing rule, pending applications, multiple transferors, installment sales
IRS: ITINs for foreign property sellers — IRS — ITIN guidance for foreign property buyers and sellers (Form W-7, the FIRPTA exception, the stamped Form 8288-A)
Form W-7 — Form W-7 — Application for IRS Individual Taxpayer Identification Number (ITIN)
IRC §1445 — IRC §1445 — Withholding of tax on dispositions of United States real property interests

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.