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What Is FIRPTA—and Why Should Buyers Care?


At ClosePoint USA, we’re committed to making your real estate transaction as smooth and informed as possible. That means helping buyers, sellers, and real estate professionals understand key laws that can impact closings—like FIRPTA.


You may have heard of FIRPTA, especially if you're buying from a seller who lives outside the U.S. But what does it actually mean? And why should it matter to you?

Let’s break it down.


💼 What Is FIRPTA?

FIRPTA stands for the Foreign Investment in Real Property Tax Act. It’s a U.S. tax law that requires foreign sellers of U.S. real estate to pay tax on the gain from the sale of their property.


To ensure this tax is collected, the law requires that a portion of the sales proceeds—usually 15%—be withheld at closing and sent to the IRS.


🧾 Why Is FIRPTA Important?

If the seller of the property is a foreign national, the buyer becomes responsible for making sure this 15% withholding happens—yes, the buyer.


If this step is skipped or mishandled, the buyer could be on the hook for the unpaid taxes, penalties, and interest. 😳


That’s why it’s so important to identify a foreign seller early in the process and ensure the title company and your real estate team are experienced in FIRPTA compliance.


🔍 How Do You Know If FIRPTA Applies?

Some red flags that FIRPTA might apply:

  • The seller lives abroad or uses a foreign mailing address

  • The seller provides a foreign passport or no U.S. tax identification number

  • The deed is held in the name of a foreign entity


At Closepoint USA, we help confirm seller status and coordinate with the right professionals to ensure FIRPTA requirements are handled correctly—so you’re protected.


✅ What Can Buyers Do to Protect Themselves?

  • Ask early: “Is the seller a U.S. citizen or resident for tax purposes?”

  • Work with a title company (like us!) that understands FIRPTA

  • Consult a tax advisor if needed to make sure your transaction is in compliance


💬 Bottom Line

FIRPTA may sound intimidating, but with the right team and knowledge, it’s completely manageable. At ClosePoint USA, we work behind the scenes to ensure compliance and help buyers avoid costly surprises.


Buying or selling property involving a foreign party? Let’s talk! We’re here to make sure your closing is smooth, secure, and stress-free.

 
 
 

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