👋Pending Real Estate Transactions
What Happens If My Property Is Under Contract but Has Not Yet Closed?
If your real estate transaction is pending (under contract but not yet closed), you still have time to plan for FIRPTA — and potentially reduce withholding and accelerate access to your funds.
At this stage, there are two primary options:
🧾 Option 1: Apply for a Reduced Withholding Certificate (Form 8288-B)
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The application is submitted on or before closing
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The 15% withholding is held by the closing agent (not sent to the IRS immediately)
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Funds are typically held for up to ~90 days while the IRS reviews the application
✅ Key Advantage:
Once the IRS approves the reduced withholding amount, any excess funds are released immediately to the seller
👉 This is often the fastest way to recover cash
🧾 Option 2: Full Withholding Remitted to the IRS
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The buyer (or withholding agent) sends 15% of the gross sales price to the IRS
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Payment must be made within 20 days after closing
Then:
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The seller must file a U.S. tax return at year-end
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Any refund is processed after filing
⏳ Typical Timeline:
Refunds may take 3–4 months or longer after the return is filed
⚠️ Why This Decision Matters
Choosing the right approach can mean:
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Faster access to your funds
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Avoiding unnecessary withholding
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Reducing administrative delays
Most foreign sellers benefit from planning before closing, rather than reacting after funds are already sent to the IRS.