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Get a Title Quote →FIRPTA Withholding: What DMV Buyers, Sellers, and Agents Need to Know
FIRPTA can become a closing problem when the parties identify it too late. The key fact is simple: when a foreign person disposes of a U.S. real property interest, the buyer is generally the withholding agent. A settlement company may help coordinate documents and payment, but that assistance does not erase the buyer's federal responsibility.
This guide explains the transaction workflow for Washington DC, Maryland, and Virginia real estate. It is educational information, not legal or tax advice. A seller's immigration and tax status, ownership structure, gain, treaty position, and eligibility for an exception or reduced withholding should be reviewed by a qualified tax professional or attorney.
Source review: Updated August 26, 2026 using current IRS FIRPTA guidance and January 2026 Form 8288 instructions.
What FIRPTA is
The Foreign Investment in Real Property Tax Act authorizes the United States to tax foreign persons on dispositions of U.S. real property interests. FIRPTA's collection mechanism generally requires the transferee—the buyer—to withhold from the amount realized by a foreign transferor and send the required amount to the IRS.
The rule can apply to more than a conventional home sale. The IRS definition of a disposition includes sales, exchanges, gifts, liquidations, redemptions, and certain other transfers. Ownership through an entity, trust, or partnership can change the analysis.
Read the IRS FIRPTA withholding overview for the controlling federal summary.
The non-foreign certification
A common exception applies when the seller provides a certification, under penalties of perjury, that the seller is not a foreign person. The certification generally includes the seller's name, U.S. taxpayer identification number, and address. It may be delivered to the buyer or, when the rules are satisfied, to a qualified substitute.
The certification is not a magic shield. The IRS says it is ineffective if the buyer or qualified substitute has actual knowledge, or receives notice, that it is false. Required delivery and record procedures also matter. A seller's visa, citizenship, green-card, tax-residency, trust, or entity questions should be escalated rather than guessed at the closing table.
Do not send a taxpayer identification number through this website's general contact form or ordinary email. Use the secure process provided for an accepted transaction.
Withholding certificates and Form 8288-B
The IRS may issue a withholding certificate that reduces or eliminates the amount otherwise required. The buyer, the buyer's agent, or the seller may apply, depending on the circumstances. A common reason is that standard withholding would exceed the seller's maximum tax liability.
The IRS says it generally acts within 90 days after receiving a complete application, including the required taxpayer identification numbers. That makes early action essential. A planned closing date does not make an incomplete or late application move faster.
See the IRS pages for withholding certificates and Form 8288-B.
Forms and timing at closing
When withholding is required, the filing package commonly includes:
- Form 8288, the withholding tax return.
- Form 8288-A, the statement used to report withholding allocated to the foreign seller.
- Payment of the amount required under the applicable rule or certificate.
The current Instructions for Form 8288 generally require filing and payment by the 20th day after the transfer, subject to special procedures when a withholding-certificate application is pending or a different exception applies. The parties should use the current form revision and instructions rather than an old closing checklist.
A practical FIRPTA timeline
Before or immediately after contract ratification
- Ask whether any seller may be a foreign person for U.S. tax purposes.
- Identify whether title is held individually, jointly, in trust, or through an entity.
- Send the contract to the selected settlement company early.
- Engage a qualified U.S. tax adviser when status or withholding may be uncertain.
During settlement preparation
- Confirm the appropriate certification, exception, or withholding path.
- Determine whether a withholding-certificate application is needed.
- Confirm taxpayer identification requirements through a secure channel.
- Document the buyer's residence intent if a residence-based rule is being considered.
- Build the expected withholding into the seller's proceeds analysis.
At and after closing
- Execute the correct certifications and closing documents.
- Retain and report the required amount when withholding applies.
- File the current IRS forms within the applicable deadline.
- Give the seller the documentation needed to claim credit on the appropriate U.S. return.
How DMV Title Guy and Pruitt Title fit into the process
Will Rapuano operates DMV Title Guy as an education and business-development website separate from Pruitt Title LLC's corporate website. It is not a tax adviser, title agency, or settlement provider. Will is Pruitt's Marketing and Business Development Officer, and eligible transaction requests may be referred to Pruitt for independent review.
For a prospective DC, Maryland, or Virginia closing, Will can help surface the FIRPTA question early and connect the transaction with the appropriate Pruitt Title team member. If Pruitt Title accepts the transaction, its settlement team can explain its closing-document and remittance workflow and coordinate with the parties' tax or legal advisers. Eligibility for an exception, reduced withholding, or a tax position remains transaction-specific.
Contact Will about an early FIRPTA closing review before sending sensitive documents or taxpayer identification information.
Frequently Asked Questions
Who is responsible for FIRPTA withholding?
In most residential purchases, the buyer or transferee is the withholding agent. The buyer must determine whether the seller is a foreign person and, when withholding applies, make sure the required amount is withheld, reported, and paid. The IRS warns that a withholding agent can be personally liable for required withholding, plus penalties and interest. A title or settlement company may collect information, prepare closing documents, coordinate with the parties and their tax advisers, and facilitate remittance. The buyer should not assume that using a settlement company transfers the statutory responsibility away from the buyer. If a foreign seller is possible, notify the settlement team as soon as the contract is signed—well before closing.
How much is withheld?
The general rate is 15% of the amount realized, not 15% of the seller's gain. The amount realized generally includes cash paid, the fair market value of other property transferred, and liabilities assumed by the buyer or attached to the property. For a straightforward $700,000 cash-price transaction with no other amount-realized adjustments, 15% would be $105,000. That withholding is a collection mechanism, not necessarily the seller's final tax. The seller later reports the disposition and claims credit for properly reported withholding. For qualifying purchases in which the buyer will use the property as a residence:
- $300,000 or less: withholding may not be required under the residence exception.
- More than $300,000 and no more than $1,000,000: the rate may be reduced to 10%.
- More than $1,000,000: the general 15% rate applies. The residence test and amount-realized rules are specific. The parties should not rely on the listing description, loan occupancy box, or an informal statement alone. Review the current IRS exceptions from FIRPTA withholding and the transaction facts with a qualified adviser.
What is the standard FIRPTA withholding rate?
The general rate is 15% of the amount realized by the foreign seller, not 15% of the gain. Residence-related rules, certifications, entity rules, or an IRS withholding certificate may change the result.
Is the buyer responsible for FIRPTA withholding?
Generally, yes. The IRS identifies the buyer or transferee as the withholding agent in most property purchases. A settlement company may assist with the workflow, but the buyer should not assume that assistance eliminates the buyer's statutory responsibility.
When can FIRPTA withholding be reduced to 10%?
A 10% rate may apply when the amount realized is more than $300,000 but no more than $1,000,000 and the buyer satisfies the residence-use requirements. Confirm the facts and current IRS rules before relying on the reduced rate.
What is a FIRPTA affidavit?
The term usually refers to a certification of non-foreign status. It is signed under penalties of perjury and generally includes the seller's name, taxpayer identification number, and address. It is ineffective when the buyer or qualified substitute knows, or receives notice, that it is false.
How long does an IRS withholding certificate take?
The IRS says it generally acts within 90 days after receiving a complete application with the required taxpayer identification numbers. Incomplete submissions and ITIN issues can delay the process, so the seller should seek qualified help early.
Should I send my SSN or TIN through the DMV Title Guy contact form?
No. Do not place SSNs, TINs, bank information, or wire instructions in a general website form or ordinary email. Use only the secure intake method provided for an accepted transaction.
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