Can I reduce the 15% FIRPTA withholding?

Yes. By filing Form 8288-B before or at closing, you can apply for a withholding certificate that reduces the withholding to the amount of the actual expected tax on the gain, which is usually far less than 15% of the gross price. The funds are then held until the IRS issues the certificate.

Do I need an ITIN to sell US property?

Yes. Both the seller and often the spouse need a US Individual Taxpayer Identification Number (ITIN) to process the sale and any withholding certificate or refund. We prepare Form W-7 with the required certified documentation.

How do I get the over-withheld FIRPTA tax back?

If more was withheld than the actual tax on the gain, you recover the difference by filing a Form 1040-NR for the year of sale. If you filed a withholding certificate, the excess is released sooner. We handle both paths.

15% of the gross sale price — not the profit — is withheld

FIRPTA Withholding for Canadians Selling US Property

Sell a US condo or home as a non-US resident and the IRS makes the buyer hold back 15% of the entire sale price — on a $600,000 sale, that is $90,000 frozen, even if your actual gain is small. We file the withholding certificate to cut it down at closing and recover what was over-withheld.

Reduce My Withholding How It Works

United States

Canada

The Trap: Withholding Is on the Gross Price

FIRPTA withholding is calculated on the full sale price, not your profit. So even a break-even or modest-gain sale can have tens of thousands of dollars locked with the IRS for months. The withholding is a prepayment — your real US tax is only on the gain — but getting the difference back takes the right filings.

15%

Default withholding

Of the gross sale price, withheld by the buyer at closing.

8288-B

Withholding certificate

Reduces withholding to the actual expected tax on the gain.

W-7

ITIN application

Required for the seller (and often spouse) to process the sale.

How We Handle the Sale

File Form 8288-B withholding certificate before closing to reduce the held amount to the real tax on the gain
Apply for ITINs on Form W-7 for seller and spouse with certified documentation
Coordinate Forms 8288 / 8288-A with the buyer, escrow, and title company
Prepare the Form 1040-NR for the year of sale to report the gain and recover excess withholding
Coordinate the Canadian side so the US tax is credited on your T1 and you are not double-taxed

Timing is everything. The withholding certificate must be in motion before closing to keep funds from being sent to the IRS. If you are even thinking about listing your US property, talk to us first — not after the sale closes.

FIRPTA FAQs

What is FIRPTA withholding?

When a non-US person sells US real estate, the buyer must withhold 15% of the gross sale price and remit it to the IRS on Forms 8288 and 8288-A. It is a prepayment of tax on the sale, not the final tax owed.

Can I reduce the 15%?

Yes. Filing Form 8288-B for a withholding certificate before or at closing can reduce the withholding to the actual expected tax on your gain, which is usually far below 15% of the gross price.

Do I need an ITIN?

Yes. The seller, and often the spouse, need a US ITIN to process the sale, certificate, or refund. We prepare Form W-7 with certified documentation.

How do I get over-withheld tax back?

By filing a Form 1040-NR for the year of sale. If a withholding certificate was filed, the excess is released sooner. We handle either route and coordinate the Canadian credit.

Selling US Property? Don't Lose 15% to the IRS.

A short call covers your sale timeline and whether a withholding certificate can keep your money where it belongs. No commitment.

info@ilmcpa.com +1 (206) 209-8210