Disposition of Real Property from Foreign Sellers (FIRPTA)

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FLORIDA REAL ESTATE SALES ASSOCIATE COURSE

Taxes Affecting Real Estate

Section 14 of 17

The Foreign Investment in Real Property Tax Act (FIRPTA) ensures that foreign citizens pay taxes on the sale of U.S. real estate. Because the IRS cannot easily chase a foreign seller once they leave the country, the law requires the buyer to withhold a percentage (typically 15%) of the gross sale price at closing and send it directly to the IRS. If the buyer fails to do this, the buyer—not the seller—can be held liable for the tax.