Form 8288
US Withholding Tax Return for Dispositions by Foreign Persons of US Real Property Interests (FIRPTA)
Form 8288 is the IRS form used by buyers to report and remit the 15% FIRPTA withholding when purchasing US real property from a non-US seller. As the Canadian seller, you receive Form 8288-A as your receipt of the withholding, which you attach to your 1040-NR for the year of sale to claim refund of any excess. Form 8288-B is the related Withholding Certificate application that reduces the withholding before closing.
⚠️ Important Disclaimer
This content is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently — always verify with the CRA and IRS or consult a qualified cross-border tax accountant before making decisions.
20 days after the date of transfer
Buyers of US property from foreign persons (Canadians); also filed by sellers when applying for reduced withholding
Key Takeaways
- FIRPTA requires the BUYER to withhold 15% of gross sale price when a non-US person sells US real property — remitted to IRS via Form 8288 within 20 days of closing.
- On a $500,000 sale, $75,000 is held by the IRS for 12-18 months — until the seller's 1040-NR for the year of sale is processed and refunds any excess.
- File Form 8288-B (Withholding Certificate) at least 90 days before closing to reduce the 15% gross-price withholding to your actual estimated capital gains tax.
- Reduced rates: 0% if sale ≤ $300,000 with buyer-occupant certification; 10% if $300k-$1M with buyer-occupant certification; 15% otherwise.
- As the seller, you receive Form 8288-A from the buyer's closing agent as proof of withholding. Attach to your 1040-NR Schedule D for refund claim.
When is FIRPTA / Form 8288 required?
FIRPTA (Foreign Investment in Real Property Tax Act) is triggered when:
- The seller is a non-US person (Canadian resident, non-resident alien, foreign corporation, etc.)
- The asset sold is a US real property interest — physical real estate located in the US, or stock in certain US real property holding corporations
Both conditions met → buyer must withhold 15% of gross sale price and remit to IRS via Form 8288 within 20 days of closing. This is automatic — the buyer's closing agent calculates and withholds at closing without seller action.
The 15% gross-price withholding
Current FIRPTA rate: 15% of gross sale price. Not 15% of gain. Not 15% of net proceeds. 15% of the contract sale price.
Reduced rates for buyer-occupants:
- $300,000 or less + buyer-occupant certification = 0% withholding. Buyer certifies they will personally occupy the property for at least 50% of the days used over each of the next two years.
- $300,001 to $1,000,000 + buyer-occupant certification = 10% withholding.
- Over $1,000,000 = 15% regardless of buyer use.
Buyer-occupant certification is a one-page statement signed by the buyer at closing. If the buyer is an investor, corporation, or LLC, no certification available and default 15% applies.
Form 8288-B Withholding Certificate — your way to reduce withholding
The biggest cash-flow improvement for Canadian sellers is the Form 8288-B Withholding Certificate, filed with the IRS at least 90 days before closing.
How it works:
- You (or your cross-border CPA) prepare Form 8288-B with your projected capital gains tax on the sale
- File with IRS >= 90 days before expected closing
- IRS reviews and issues a Withholding Certificate specifying the reduced withholding amount (usually matching your actual estimated tax)
- At closing, the buyer's agent withholds the reduced amount per the certificate instead of default 15%
Concrete numbers: $500,000 sale, $300,000 basis, $30,000 estimated capital gains tax. With approved 8288-B, $30,000 withheld instead of $75,000 default. $45,000 stays in your pocket at closing.
Application cost: $500-1,500 typical CPA fee. For a typical sale, cash-flow benefit vastly exceeds the prep fee.
Forms 8288, 8288-A, 8288-B — who files what
- Form 8288— filed by the BUYER (or buyer's closing agent) to report and remit the FIRPTA withholding to the IRS within 20 days of closing.
- Form 8288-A— issued by the IRS as proof of withholding. Buyer's agent provides Copy B to the seller. Seller attaches Copy B to the 1040-NR for the year of sale to claim refund of excess withholding.
- Form 8288-B — filed by the SELLER before closing to apply for a Withholding Certificate that reduces the 15% default rate.
- Form 8288-C (less common) — used when certain partnerships have a foreign partner subject to FIRPTA.
Frequently asked questions
What is FIRPTA?
Foreign Investment in Real Property Tax Act — a 1980 US tax law that requires buyers of US real property to withhold 15% of the gross sale price when the seller is a non-US person. Designed to ensure foreign sellers actually pay US tax on the sale gain. Filed via Form 8288 by the buyer; reduced via Form 8288-B Withholding Certificate applied for by the seller.
How do I reduce FIRPTA withholding before closing?
File Form 8288-B (Withholding Certificate) with the IRS at least 90 days before closing. The IRS reviews your estimated capital gains tax and issues a certificate authorizing reduced withholding — typically matching your actual tax rather than the default 15% of gross price. Most cross-border CPAs prep this for $500-1,500.
When does FIRPTA NOT apply?
Three exemptions: (1) sale price ≤ $300,000 AND buyer certifies they will occupy as residence for 50%+ of days used over next 2 years = 0% withholding; (2) sale price $300,001-$1,000,000 with same buyer-occupant certification = 10% reduced rate; (3) certain non-recognition transactions (1031 exchanges, etc.) but these have their own rules.
How do I get my FIRPTA refund?
File Form 1040-NR for the year of sale with Schedule D and Form 8949 reporting the sale. Attach Form 8288-A (Copy B given to you by the buyer's closing agent) as proof of withholding. Refund of any over-withheld amount typically arrives 6-12 months after filing.
What's the deadline for the buyer to remit Form 8288?
Within 20 days of the date of transfer (closing). The withholding goes from the buyer's closing agent directly to the IRS. As the seller, you receive Form 8288-A as proof — keep it for attachment to your 1040-NR for the year of sale.
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