FIRPTA (U.S. Withholding Tax on Real Estate Proceeds)

Laurie Leppo, Enrolled Agent

Congress passed and President Obama signed into law in December 2015 important changes to the Internal Revenue Code section dealing with the withholding tax on the sale of U.S. real estate by non U.S. investors. This code section has been known as the Foreign Investment in Real Property Tax Act of 1980 (referred to as FIRPTA). The amending law provisions were contained in a law known as the Protecting Americans from Tax Hikes Act of 2015 (PATH Act).

Under FIRPTA, foreign investors are subject to withholding on dispositions of U.S. real estate. With the new law, the rate of FIRPTA withholding increases from 10% of the gross sales price to 15% effective February 16, 2016.

FIRPTA makes it the responsibility of the buyer of the U.S. real estate to withhold the proper amount from the foreign seller. If the buyer fails to withhold the proper amount, they can be held liable for the withholding. The buyer’s closing agent generally acts on the buyer’s behalf to assist, with meeting any withholding obligations, and making payment to the U.S. Treasury.

The previous rules provided for an exception to FIRPTA withholding on the sale of U.S. real estate. Under the new rules this exception is continued provided: 1) the sales price is $300,000 or less and 2) the buyer (including family members) intends to use the property for personal purposes as a residence for at least 50% of the time the property is in use for the next two 12-month periods following the transfer.

The days the property is unoccupied are excluded in the 50% calculation. Vacant land is specifically not eligible for this treatment, even if the buyer intends to build a residence on the property. For the exception to apply, the buyer must be an individual, as opposed to a partnership, corporation, estate or trust.

The FIRPTA rules allow for a reduction of the 15% withholding rate to the prior 10%, if the sales price does not exceed $1,000,000 and, just like for the exception to FIRPTA withholding, the buyer intends to use the property as a residence.

If the actual tax on the sale is significantly less than the 15% withholding (or 10% as applicable), or non-recognition treatment applies, the seller may apply for a withholding certificate from the IRS. This withholding certificate allows for an amount of less than 15% of the gross sales price (or 10% as applicable) to be withheld.

Prior to making any purchase of U.S. real estate, non U.S. buyers should consult qualified legal and tax advisors regarding the form of ownership that should be used and the tax implications for different ownership structures.


At Nicolas Leppo Tax and Accounting, we work with our clients on an ‘as needed basis’. Do you need us every week? Every month? Quarterly for reviews? Or, once a year, to prepare and file your taxes? We’re here to answer your questions and provide useful tax-saving advice. We provide a wide range of services to meet your needs.
At Nicolas Leppo Tax and Accounting, we meet with each client personally. We offer each and every client a hands-on, detailed review of your tax return. We concentrate on working with each client to reduce their tax liability as much as possible while providing year-round tax advice and planning.
We save you time and money by regularly reviewing your business and personal finances. We help you strategize on new and better ways to save on your taxes. We stay on top of your finances and taxes so when tax time arrives, you don’t have to spend your weekends gathering information, and trying to remember what you did 6 or 8 months ago. We have it all organized for you, and you’ll know where your company stands financially each month, as the year progresses.
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Laurie Leppo guides her international, non-resident clients throughout the year as she explains accounting and tax issues in simple, easy to understand terms. This is very helpful to her international clients when it comes to all the IRS & state filing requirements for work, investment, studies or just traveling. She also helps her international clients with a variety of needs such as applying for an ITIN, filing a non resident tax return, reviewing FIRPTA issues, avoiding the 10% or 30% U.S. tax of ECI along with many other types of tax issues our international friends may have. Laurie is also fluent in French and works with many French business owners who are in the U.S. on visas.

  • Experienced with FIRPTA processing
  • Certified Acceptance Agent for ITINs (CAA)
  • Laurence speaks fluent French and can explain the US tax procedures in French or even act as your translator if needed


Here’s what our client’s have to say…

“Thanks for taking so much time with me on our first visit. You gave me the answers to questions I didn’t even know to ask. You even gave me some great ideas on tax strategies I can use. Thanks so much Laurie!”

“I need all the help I can get with my taxes.  Laurie’s insights and tax strategies are a lot of help. She is an excellent accountant and a trusted advisor.”

Member, NAEA Member, NSA Member, FSA Member, FSEA IRS Certified Acceptance Agent