In today's real estate market, foreign investors are increasingly active in buying and selling U.S. properties. As a real estate agent, it is critical to understand FIRPTA (Foreign Investment in Real Property Tax Act) when your client is involved in the sale of U.S. property — especially if they are not a U.S. tax resident.
Whether you're representing the buyer or the seller, here’s what you need to know:
🔍 If You Represent the Buyer:
Under FIRPTA, the buyer is responsible for withholding 15% of the gross sales price from the foreign seller and remitting it to the IRS — unless the seller has obtained a valid withholding certificate.
Important:
Failure to withhold may result in the buyer (or their agent) being held liable for the unpaid tax by the IRS.
As the buyer’s agent, make sure to:
✅ Confirm the seller’s tax status early in the transaction
✅ Notify the buyer of FIRPTA obligations
✅ Ensure proper forms are prepared (IRS Form 8288, 8288-A)
✅ Plan ahead to avoid last-minute closing delays
🧾 If You Represent the Seller:
When your client is a foreign person, the sale will likely trigger FIRPTA withholding.
You should:
✅ Confirm your client's tax residency status
✅ Help the seller apply for a Withholding Certificate from the IRS if they qualify for a reduced withholding
✅ Prepare and submit the required documentation ahead of closing
✅ Inform the seller that they must still file a U.S. tax return to report the sale and claim potential refunds
💼 How Cao & Associates, CPA Can Help:
We specialize in real estate tax matters and FIRPTA compliance, providing:
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✅ Seller tax residency determination
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✅ FIRPTA withholding preparation & IRS submission
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✅ Withholding certificate application (Form 8288-B)
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✅ Post-sale tax return & refund filing
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✅ Full bilingual support (English & Chinese)
📬 Contact Us Today:
Cao & Associates, CPA – Trusted by investors and real estate professionals across the U.S.
🌐 Website: www.caoandassociates.net
📧 Email: info@caoandassociates.net
💬 WeChat: WACPA3
📌 Bonus Tip for Agents:
Always confirm the seller's tax status and plan for FIRPTA early. The sooner the buyer or seller engages with a CPA, the smoother the closing process will be.