Generally, FIRPTA withholding is not required in the following situations; however, notification requirements must be met:

  1. The buyer (transferee) acquires the property for use as a residence and the amount realized (sales price) is not more than $300,000. The transferee or a member of the transferee’s family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days that the property is used, do not count the days the property will be vacant. For this exception, the transferee must be an individual.
  2. The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations.
  3. The disposition is of an interest in a domestic corporation and that corporation furnishes the transferee a certification stating, under penalties of perjury, that the interest is not a U.S. real property interest. In most cases, the corporation can make this certification only if either of the following is true.
    • During the previous 5 years (or, if shorter, the period the interest was held by its present owner), the corporation was not a U.S. Real Property Holding Corporation (USRPHC).
    • As of the date of disposition, the interest in the corporation is not a U.S. real property interest by reason of section 897(c)(1)(B) of the Code. The certification must be dated not more than 30 days before the date of transfer.
  4. The seller (transferor) gives the transferee a certification stating, under penalties of perjury, that the transferor is not a foreign person. The certification should contain the transferor's name, U.S. taxpayer identification number, and home address (or office address, in the case of an entity).

    The transferor can give the certification to a qualified substitute. The qualified substitute gives the transferee a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than the transferor's agent, and (b) the transferee's agent.

  5. The transferee receives a withholding certificate from the Internal Revenue Service that excuses withholding. See Withholding Certificates, later.

  6. The transferor gives the transferee written notice that no recognition of any gain or loss on the transfer is required because of a nonrecognition provision in the Internal Revenue Code or a provision in a U.S. tax treaty. The transferee must file a copy of the notice by the 20th day after the date of transfer with the Ogden Service Center, P.O. Box 409101, Ogden, UT 84409.
  7. The amount the transferor realizes on the transfer of a U.S. real property interest is zero.
  8. The property is acquired by the United States, a U.S. state or possession, a political subdivision, or the District of Columbia.
  9. The grantor realizes an amount on the grant or lapse of an option to acquire a U.S. real property interest. However, the transferee must withhold on the sale, exchange, or exercise of that option.
  10. The disposition is of an interest in a publicly traded partnership or trust. However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded partnerships or trusts.


The certifications in items 3 and 4 above are not effective if the transferee (or the qualified substitute) has actual knowledge or receives a notice from an agent (or substitute), that the certifications are false. This also applies to the qualified substitute's statement under item 4 above.

If the transferee (or the substitute) is required by regulations to furnish a copy of the certification (or statement) to the IRS and the transferee (or the substitute) fails to do so in the time and manner prescribed, the certification (or statement) is not effective.

Liability of Agent or Qualified Substitute

If the transferee (or the substitute) receives a certification discussed in item 3 or 4 above or a statement in item 4 above, and the agent, or substitute, has actual knowledge that the certification (or statement) is false, or in the case of 3 above, that the corporation is a foreign corporation, the agent (or substitute) must notify the transferee, or the agent/substitute will be held liable for the tax. The agent's/substitute's liability is limited to the compensation the agent/substitute receives from the transaction.

An agent is any person who represents the transferor or transferee in any negotiation with another person (or another person's agent) relating to the transaction, or in settling the transaction. A person is not treated as an agent if the person only performs one or more of the following acts related to the transaction:

  • Receipt and disbursement of any part of the consideration,
  • Recording of any document,
  • Typing, copying, and other clerical tasks,
  • Obtaining title Insurance reports and reports concerning the condition of the property, or
  • Transmitting documents between the parties.

A Withholding Agent is personally liable for the full amount of FIRPTA withholding tax required to be withheld, plus penalties and interest. A Withholding Agent is any person having the control, receipt, custody, disposal or payment of income that is subject to withholding. Generally, the transferee who pays an amount to the foreign person subject to withholding must do FIRPTA withholding.

References/Related Topics

Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued on or after May 1, 1986, visit the Opinions Search page of the United States Tax Court.