Can I Avoid FIRPTA Withholding? Case Study: IRS Reduces Required Withholding to $0.00
- Richard Kahn
- Jun 30
- 2 min read
Many foreign sellers ask the same question:
"Can I avoid FIRPTA withholding?"
The answer is sometimes.
Every FIRPTA transaction is different. Whether withholding applies—or whether it may be reduced or eliminated—depends on the specific facts, applicable law, and supporting documentation. No two transactions should be assumed to have the same outcome.
Recently, a recent FIRPTA matter concluded when the IRS issued a Withholding Certificate reducing the required FIRPTA withholding to $0.00, allowing the closing agent to release the escrowed funds to the sellers.
Rather than describe the engagement ourselves, we believe the clients' own words best tell the story.
The following email is reproduced verbatim with the clients' permission.
"My husband and I are Canadian citizens. Very late in the closing process, we learned that FIRPTA withholding could apply to the sale of our Florida property. My husband didn't yet have an ITIN, and our closing attorney referred us to Richard Kahn of FIRPTA Refunds.
Richard obtained my husband's ITIN through the IRS Certified Acceptance Agent (CAA) program while preparing our Form 8288-B application. After reviewing our records and analyzing the sale, he determined that we had no taxable gain and submitted the required documentation to the IRS.
A few months later, the IRS issued a Withholding Certificate stating that the required withholding for the $345,000 tax liability exceeded our maximum tax liability and reduced the required withholding to $0.00, allowing the escrowed funds to be released.
Richard's knowledge, responsiveness, and attention to detail made a stressful process much easier. We are sincerely grateful for his help.
— Bruce & Patricia Randall"
Every FIRPTA Matter Is Different
This case illustrates why foreign sellers should not assume that FIRPTA withholding is automatic or that every transaction will have the same result.
Some transactions require full withholding. Others may qualify for a reduction or elimination of withholding based on the applicable law, the facts of the transaction, and timely submission of the appropriate IRS documentation.
Each FIRPTA transaction deserves an independent review before conclusions are reached.
If you are buying or selling U.S. real estate and have questions about FIRPTA withholding, we would be pleased to discuss your specific circumstances and explain the options that may be available.
Richard Kahn
Founder, FIRPTA Refunds
FIRPTA Refunds provides FIRPTA withholding advisory, withholding certificate, ITIN, tax filing, and refund recovery services for foreign sellers of U.S. real estate. Protecting clients since 2008. Complimentary consultation.
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