FIRPTA & California Withholding for Foreign Sellers
By Brian Cooper, REALTOR®Updated 7 min read
Direct AnswerWhen a foreign person sells US real estate, FIRPTA generally requires the buyer to withhold 15% of the gross sales price and remit it to the IRS (IRC §1445). Reduced treatment can apply: no withholding if the buyer will use it as a residence and the price is $300,000 or less, and 10% for owner-occupied homes priced over $300,000 up to $1,000,000. California adds its own real estate withholding - 3.33% of the sales price on Form 593 by default. Withholding is a prepayment, not a final tax; you can seek a reduced withholding certificate or claim a refund when you file. Brian is a REALTOR®, not a CPA - coordinate with a tax professional.
FIRPTA surprises foreign sellers more than almost any other rule - it withholds against the sale price, not the profit. Knowing it in advance lets you plan around it.
Federal FIRPTA (IRC §1445)
On a foreign person's sale of a US real property interest, the buyer must generally withhold and remit:
Situation
Federal withholding
Buyer will use as a residence; price $300,000 or less
0% (exempt, conditions apply)
Buyer will use as a residence; price $300,001-$1,000,000
10%
All other cases (incl. price over $1,000,000)
15%
The residence exemptions require the buyer to be an individual with definite plans to reside there for the required share of days - they're conditional, not automatic.
California withholding (Form 593)
California adds its own real estate withholding - the default is 3.33% (3⅓%) of the total sales price, reported on Form 593, unless an exception or the alternative gain-based calculation applies. It works alongside, not instead of, federal FIRPTA.
It's a prepayment - and reducible
FIRPTA and CA withholding are prepayments of tax, not the final bill. If the actual tax owed is lower (or zero), a foreign seller can apply for a withholding certificate (IRS Form 8288-B) to reduce the amount held, or claim a refund by filing a US tax return. Timing the certificate application before closing matters. A CPA should run this.
Plan FIRPTA into your net-proceeds expectations early - especially if you're converting proceeds back to GBP/CAD/AUD/EUR/ZAR, where the withheld amount affects cash flow and timing.
Important - please read: Brian Cooper is a licensed California REALTOR® (DRE# 01434286), not an immigration attorney, CPA, tax adviser, or financial adviser. The visa, tax-treaty, FIRPTA, mortgage, and currency information here is general and educational - confirm your own situation with a qualified cross-border immigration attorney and CPA before acting. Any lender or service-provider referral is disclosed under RESPA. Equal Housing Opportunity - service-area awareness only, never steering by national origin or any protected class.
