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FIRPTA Withholding Calculator

When a non-resident alien sells US real estate, the buyer must withhold 15% of the gross sale price under FIRPTA. This calculator estimates that withholding plus your projected actual US tax on the gain, so you can see whether to file Form 8288-B for a reduced withholding certificate.

⚠️ 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.

What the buyer pays
What you paid when you bought
Capital improvements added to basis
Total Schedule E depreciation across years owned
Commissions, legal, closing costs
0 if no state tax (FL, TX, WA, NV, etc.)
FIRPTA exemption for buyer-residence purchases
US LT cap gains rate based on your filing status / income
FIRPTA withholding · estimated tax · refund estimate
FIRPTA rate
15%
FIRPTA withheld at sale
$0
Adjusted basis
$0
Realized gain
$0
Depreciation recapture (25%)
$0
LT cap gains tax
$0
Total estimated US tax
$0
Estimated refund
$0
Estimates only. Actual tax depends on your full US tax situation, NIIT (3.8% net investment income tax) which this calculator does not include, and state-specific rules. To reduce FIRPTA withholding before sale, file Form 8288-B with the IRS for a withholding certificate based on your projected actual tax. Filing 8288-B early is critical — the IRS can take weeks to process.

How FIRPTA works

The Foreign Investment in Real Property Tax Act of 1980 created a withholding mechanism to ensure foreign sellers pay US tax on gains from US real property. The buyer is the withholding agent — they hold back 15% of the gross sale price and remit it to the IRS using Form 8288 within 20 days of closing.

The withholding is not the tax. It's a deposit. Your actual US tax is calculated on your 1040-NR for the year of sale, applying long-term capital gains rates to the realized gain after depreciation recapture. If FIRPTA withholding exceeds your actual tax, you receive the difference as a refund. If it's less, you owe the difference.

Form 8288-B — withholding certificate

If your projected actual tax is less than 15% of gross sale price (which is common — the gain is usually a fraction of the sale price, not the whole thing), file Form 8288-B before closing to request reduced withholding. The IRS reviews your projected tax calculation and, if approved, issues a certificate authorizing the buyer to withhold less. Processing takes 60-90 days, so file as soon as you have a contract — ideally even before listing.

FAQ

What is FIRPTA?
The Foreign Investment in Real Property Tax Act (1980) requires the buyer of US real property from a foreign person to withhold and remit 15% of the gross sale price to the IRS. The seller (you) recovers any excess by filing a US tax return for the year of sale, or by obtaining a withholding certificate (Form 8288-B) before closing.
Are there any exemptions?
Two exemptions for buyer-residence purchases: (1) 0% withholding if the sale price is $300,000 or less AND the buyer will use the property as a residence at least half the time during the first two years; (2) 10% withholding (instead of 15%) if the sale price is $1,000,000 or less AND the buyer's residence-use intent applies. For investment buyers or sales above $1M, the full 15% applies regardless.
How do I reduce FIRPTA withholding before closing?
File Form 8288-B with the IRS Application for Withholding Certificate. The form lets you submit your projected actual tax liability (capital gains tax + depreciation recapture - foreign tax credit) and request that withholding be reduced to that amount instead of the default 15% of gross. The IRS typically issues a determination within 90 days, so file well before your closing date.
What is depreciation recapture?
If you claimed depreciation on the property during years you owned it (which you typically did on Schedule E), the IRS reclaims that benefit at sale. The depreciation amount is taxed as 'unrecaptured Section 1250 gain' at a maximum rate of 25% — separate from the long-term capital gains rate on the remaining gain. The calculator above splits the two for you.
What's the difference between FIRPTA withholding and my actual US tax?
FIRPTA is a withholding mechanism, not a tax. The IRS holds 15% of gross sale price as a deposit while you file your US tax return for the year of sale. Your actual tax is the long-term capital gains rate (15% or 20%) on net gain, plus 25% on the depreciation recapture portion, plus state income tax if applicable. If FIRPTA withheld more than you actually owe, you receive a refund when you file. If less, you owe the difference.
Does the Canada-US Tax Treaty help with FIRPTA?
The treaty does not eliminate FIRPTA, but Canadian residents who pay US tax on the gain can claim a foreign tax credit on their Canadian return to offset CRA's claim on the same gain. Canada also taxes the capital gain (50% inclusion rate × marginal rate), and the US tax paid offsets the Canadian tax owing on that gain.
When does NIIT apply?
The Net Investment Income Tax (NIIT) is a 3.8% surtax on investment income, including capital gains, for high-income US filers. As a non-resident alien, NIIT generally does not apply to you. This calculator does not include NIIT. If you became a US tax resident at any point during the year of sale, NIIT may apply to that portion of the gain.

Related

FIRPTA — full topic guide →
Schedule E form guide →
Schedule E Calculator →
Canadian landlord, US property →