I'm Selling US Land as a Foreign or Non-Resident Owner — Why Is the Buyer Withholding Part of My Sale Price?
Key Takeaways
- FIRPTA withholding is calculated on your gross sale price, not your profit. Under IRC § 1445(a), when the seller of US real estate is a "foreign person," the buyer must withhold 15% of the "amount realized" on the sale — meaning you can owe withholding on a deal where you actually lost money, per 26 U.S.C. § 1445 and the IRS's FIRPTA withholding guidance
- A Form 8288-B withholding certificate, filed with the IRS before closing, can reduce or eliminate that withholding down to what you'll actually owe — but the IRS generally takes up to 90 days to act on a complete application, so it has to be started well ahead of your closing date, per the IRS's Withholding Certificates guidance
- Several of Jerez Land's operating states layer their own nonresident-seller withholding on top of the federal FIRPTA amount, based on the seller's out-of-state residency rather than citizenship — Alabama (3-4%), Georgia (3%), Mississippi (5% above a $100,000 threshold), and South Carolina (7% or 5%) each withhold separately at closing, per each state's own statute
I'm Selling US Land as a Foreign or Non-Resident Owner — Why Is the Buyer Withholding Part of My Sale Price?
Because federal law makes the buyer responsible for it. Under the Foreign Investment in Real Property Tax Act (FIRPTA), codified at 26 U.S.C. § 1445, a buyer who purchases US real property from a "foreign person" must withhold 15% of the gross amount realized on the sale and send it to the IRS — regardless of whether the sale produced a profit, a loss, or a wash. That last part is the detail almost every foreign or non-resident seller misses: the withholding is calculated on your sale price, not your gain, so a seller who inherited land decades ago and sells it for less than it's now worth in carrying costs can still see 15% of the full price disappear at closing. This guide walks through what FIRPTA actually requires, who it applies to, how to reduce the withholding before closing instead of waiting on a refund, and what a few of Jerez Land's nine operating states add on top of it. It does not cover ordinary US income-tax treatment of a land sale — see does selling land count as income and capital gains tax on selling land for that — and it does not apply at all if you're simply a US citizen living in a different state than your land; that situation is covered separately in selling land as an out-of-state owner. You can browse more guides on our blog.
What Exactly Does FIRPTA Require, and Who Has to Withhold the Money?
FIRPTA requires the buyer (called the "transferee" in the statute) to withhold and remit the tax — not the seller, and not the seller's own choice — and it is calculated on the total "amount realized" on the sale, defined by the IRS as the cash paid or to be paid, the fair market value of any other property transferred, plus any liability the buyer assumes. The general rate under IRC § 1445(a) is 15% of that amount realized. Two narrower tiers exist but turn on the buyer's intended use of the property, not the seller's situation: a reduced 10% rate applies when the amount realized is between $300,000 and $1,000,000 and the buyer will use the property as a personal residence, and no withholding is required at all when the amount realized is $300,000 or less and the buyer will use it as a residence, under § 1445(b)(5) and (c)(4). If you're selling raw land to an investor or a business buyer — which is the transaction Jerez Land is on the other side of — that residence-based reduced rate generally doesn't apply, because the buyer isn't acquiring the land to live on. Expect the standard 15% rate to be the starting point in that kind of sale unless a withholding certificate changes it (more on that below).
The buyer is the one legally on the hook if withholding doesn't happen. If a transferee fails to withhold when required, the transferee can be held personally liable for the tax that should have been withheld, which is exactly why title and escrow companies routinely build a FIRPTA check into every closing — asking the seller to certify their status, and if the seller can't certify as a US person, holding back the required percentage from the payoff before anything is disbursed. You will not typically negotiate whether this happens; you'll be asked to sign a certification, and the escrow or title company will handle the mechanics from there.
Am I Actually a "Foreign Person" Under This Rule — Or Am I Exempt Because I Have a Green Card or Live in the US Part-Time?
You're a "foreign person" for FIRPTA purposes if you are anyone other than a United States person — which the statute defines, under § 1445(f)(3), as excluding US citizens and US residents. Critically, "US resident" for this purpose is not about where your land sits or where you grew up; it's a specific tax-law test, and if you pass it, FIRPTA does not apply to you at all, even if you were born abroad, hold a foreign passport, and haven't set foot in the US in years.
You are treated as a US person, not a foreign person, if either of these is true:
- You hold a green card (the "green card test") — the IRS treats lawful permanent residents as US persons for tax purposes regardless of citizenship, per the IRS's guidance on taxation of nonresident aliens.
- You meet the substantial presence test — you were physically present in the US for at least 31 days during the current year, and for at least 183 days across a weighted three-year count: all of this year's days, plus one-third of last year's days, plus one-sixth of the days from two years ago, per the IRS's Substantial Presence Test page. A handful of narrow exceptions exist (commuters from Canada or Mexico, short international transits under 24 hours, certain students and diplomats), and even someone who technically meets the test can sometimes still claim nonresident status under a "closer connection" exception — which is a real complication, not a formality, and worth a conversation with a cross-border tax preparer before you assume either way.
If neither test applies to you — you're a nonresident alien individual, or the seller is a foreign corporation, foreign partnership, foreign trust, or foreign estate — you're a foreign person under FIRPTA, full stop, and the withholding applies regardless of how long you owned the land or how the parcel came to you. If your land is held inside an entity rather than in your own name, see our guide on selling land held in an LLC or business entity for how ownership structure changes who the "seller" actually is for tax purposes. The standard workaround for sellers who are US persons but might look foreign on paper (a US citizen living abroad, for instance) is a nonforeign affidavit — a sworn certification, given to the buyer at or before closing, that you are not a foreign person. If you can honestly sign one, the buyer has no withholding obligation at all.
The Withholding Is Based on My Sale Price, Not My Profit — Can I Reduce It Before Closing?
Yes — through IRS Form 8288-B, an application for a withholding certificate that lets a foreign seller ask the IRS to authorize a reduced or eliminated withholding amount before the money ever leaves the closing table, instead of the standard 15% of your full sale price being withheld and you waiting to claim a refund on your next US tax return. Most foreign and non-resident sellers have never heard of this form, and it is the single most useful piece of paperwork in this entire process if your actual tax liability on the sale is going to be well below 15% of the gross price — which it very often is, especially for land that has appreciated only modestly, that's being sold near cost, or that's being sold at an outright loss.
The catch is timing. The IRS states it will "generally act on these requests within 90 days after receipt of a complete application including the Taxpayer Identification Numbers of all the parties to the transaction," per the IRS's Withholding Certificates guidance — which means a Form 8288-B application filed the week before closing accomplishes nothing; it needs to be started well in advance. There is a real safety valve, though: if you (the seller) apply for the certificate and notify the buyer in writing that you've done so on or before the day of the transfer, the buyer is not required to file and remit the withholding to the IRS until the certificate is issued or denied — the money is typically held in escrow in the meantime rather than sent to the IRS immediately, per the IRS's Form 8288 instructions. That protection only holds if the application was filed in good faith; if the IRS later determines the "principal purpose" of the application was to delay payment, interest and penalties apply retroactively from the 21st day after the transfer. In practice, this means: start the 8288-B process as early as you reasonably can once a sale is likely, not after you've already signed a closing date.
What Forms Actually Get Filed After Closing, and Do I Need a US Taxpayer ID Number First?
The buyer — as the withholding agent — is the one who files the paperwork after closing, not you. Form 8288 is the transmittal return the buyer files with the IRS, and Form 8288-A is the accompanying statement that reports the specific amount withheld on your transaction; the buyer must file both and remit the tax within 20 days after the date of transfer, per the IRS's Form 8288 instructions (extended only by a pending 8288-B application, as described above). You should receive a stamped copy of Form 8288-A from the IRS, or from the buyer, as your proof that the withholding was actually paid over — keep it, because it's what you'll attach to your own US tax return to claim credit for the amount withheld. Form 8288-A is not the same document as the Form 1099-S every seller of real estate typically receives regardless of residency — that's a separate information return reporting the sale itself, covered in our guide on 1099-S reporting when you sell land; a foreign seller can end up with both documents from the same closing.
That's where the taxpayer-ID requirement comes in, and it's a genuine bottleneck for sellers who've never dealt with the US tax system before. To file a US tax return and claim a refund of over-withheld FIRPTA money — or to get a Form 8288-B application processed at all, since the IRS requires the taxpayer identification numbers of all parties before it will act on a withholding certificate request — you generally need either a Social Security Number or, if you're not eligible for one, an Individual Taxpayer Identification Number (ITIN) obtained through IRS Form W-7. An ITIN doesn't grant work authorization or immigration status; it exists purely so the IRS has a number to attach your filing to, per the IRS's general ITIN guidance. If you don't already have one, applying is not something you do the week of closing — build it into your timeline the same way you'd budget time for the 8288-B application, because a missing ITIN is one of the most common reasons a foreign seller's paperwork stalls after closing instead of before it. Our general guide on what paperwork is needed to sell land covers the rest of the closing document checklist that applies regardless of your residency status.
Does My State Also Withhold Money on Top of the Federal FIRPTA Amount?
In several of Jerez Land's nine operating states, yes — a separate, state-level nonresident-seller withholding statute exists on top of whatever the IRS withholds under FIRPTA, and critically, these state rules key off the seller's state residency, not citizenship, so a foreign seller is automatically a "nonresident" for state purposes too and can face both withholdings on the same closing. The table below reflects only what we could verify directly from each state's own statute, tax department, or a state-run recording office this session; where we could not confirm a rule, we've marked it rather than guessed.
| State | Separate state-level nonresident withholding? | Rate & basis | Statute / source |
|---|---|---|---|
| Alabama | Yes | 3% of the purchase price if the buyer is an individual, 4% if the buyer is a business entity | Ala. Code § 40-18-86, per the Alabama Department of Revenue |
| Georgia | Yes | 3% of the purchase price (the seller may elect withholding on the recognized gain instead, if that figure is lower) | O.C.G.A. § 48-7-128 |
| Mississippi | Yes, above a threshold | 5% of the amount realized, but only when gross proceeds exceed $100,000 | Miss. Code § 27-7-308 |
| Michigan | Not independently verified — we found no Michigan-specific nonresident real estate withholding statute in this research | — | Confirm with a Michigan title company before closing |
| North Carolina | Uncertain — NC requires the buyer to file Form NC-1099NRS reporting the sale of real property to a nonresident seller within 15 days of closing, but our research this session could not confirm a mandatory closing-table withholding percentage the way Alabama, Georgia, Mississippi, and South Carolina have; NC's guidance instead flags that a nonresident "may be liable" for estimated state income tax on the gain | G.S. 105-163.3A referenced but not independently confirmed; NC-1099NRS per the NC Department of Revenue | |
| Oklahoma | None located | — | No Oklahoma nonresident real estate withholding statute found; standard OK closing contracts do include a federal FIRPTA seller-status affidavit |
| Pennsylvania | No — sales of real estate are expressly excluded from PA's nonresident withholding rules | N/A | 72 P.S. § 7302, per the Pennsylvania Department of Revenue |
| South Carolina | Yes | 7% of the recognized gain for individual sellers (5% for entity sellers), or 7%/5% of the full amount realized if the seller doesn't provide a gain affidavit | S.C. Code § 12-8-580 |
| Tennessee | No — Tennessee has no state individual income tax, so there's no state income-tax withholding mechanism to apply | N/A | — |
Two things worth underlining. First, in Alabama, Georgia, Mississippi, and South Carolina, a foreign seller can genuinely see two withholdings taken from the same closing — the federal 15% FIRPTA amount and a separate state percentage — computed on two different bases (gross amount realized versus recognized gain, depending on the state), by two different parties, remitted to two different agencies. That is not double taxation in the legal sense — both amounts are credits against tax you may or may not ultimately owe, recoverable by filing the appropriate return — but it is real cash pulled out of your proceeds at the closing table, twice, before you see a dollar. Second, several of these state statutes carry their own exemptions and thresholds (Alabama exempts a seller's principal residence; Mississippi's 5% only kicks in above $100,000 in gross proceeds) that are easy to miss if you're only thinking about the federal side — ask your title or escrow company to walk through both calculations before closing, not just the FIRPTA line.
How Is This Different From Just Being a US Citizen Who Lives in a Different State?
Completely different, and it's worth being precise about which situation you're actually in before you read further into either topic. FIRPTA withholding exists because of your tax residency — whether you're a US person or a foreign person under the tests above — and it has nothing to do with which state, if any, you live in. A US citizen who owns land in Georgia but lives in California is not subject to FIRPTA in any way; there's no federal withholding, because they're unambiguously a US person. That reader's situation — and the separate question of whether their state of residence differs from where the land sits — is covered in our guide on selling land as an out-of-state owner. The overlap only appears at the state level: a handful of states (Alabama, Georgia, Mississippi, South Carolina, per the table above) apply their own nonresident-seller withholding to any seller whose permanent home is outside that state, US citizen or not — so a US citizen selling Georgia land from a California address can, separately from anything FIRPTA-related, still see Georgia's 3% withheld at closing. The federal FIRPTA layer is the part that only applies to foreign and non-resident-alien sellers; the state nonresident layer, where it exists, applies more broadly than that.
Selling to a Direct Buyer Doesn't Remove the FIRPTA Requirement — But It Does Remove the Guesswork
None of this paperwork disappears because you sell to a company instead of an individual buyer — if you're a foreign person, FIRPTA withholding applies to the sale regardless of who's on the other side of the closing table. What changes is who's managing it. Jerez Land buys land directly, in writing, parcel by parcel, and the title or escrow company we close through handles the FIRPTA certification, the withholding calculation, and the Form 8288/8288-A filing as a routine part of the transaction — the same way they would on any closing involving a foreign seller. If you're not sure whether you qualify as a foreign person, whether an ITIN is already in place, or whether a Form 8288-B application makes sense for your specific numbers before you commit to a closing date, those are exactly the kinds of questions worth raising early rather than the week of signing. Request a no-obligation cash offer and tell us about your ownership situation — including your residency status — so we can flag what the closing paperwork will actually involve before you're locked into a date.
Frequently Asked Questions
I inherited 60 acres in Mississippi from my late father, but I've lived in the Philippines my whole life and never had a US Social Security Number — can I even sell it?
Yes, but plan for two things before you set a closing date: you'll likely need an Individual Taxpayer Identification Number (obtained via IRS Form W-7) before the IRS will process any refund or withholding-certificate request, and as a foreign person you'll be subject to FIRPTA withholding — 15% of the sale price under IRC § 1445(a), plus Mississippi's separate 5% nonresident withholding once gross proceeds exceed $100,000, per Miss. Code § 27-7-308. Neither of those stops the sale from happening; they just need to be built into your timeline, particularly the ITIN, since it can take time to obtain and several other steps depend on having it.
I'm a Canadian citizen closing on 40 acres in Oklahoma for $180,000 — will the entire amount get withheld, or just part of it?
Just part of it, and it's withheld from your proceeds, not added on top of your costs. Under IRC § 1445(a), the buyer withholds 15% of the amount realized — on a $180,000 sale, that's $27,000 sent to the IRS at closing, with the remaining $153,000 (minus any other closing costs) disbursed to you. That withheld amount isn't necessarily your final tax bill; if your actual gain on the property is small or the sale is near a wash, you can file a US tax return afterward to claim a refund of the difference, or apply for a Form 8288-B withholding certificate before closing to have less withheld in the first place.
I have a US green card but spend most of the year in Spain — does FIRPTA even apply to me when I sell my land?
No. Holding a US green card makes you a US person for federal tax purposes under the "green card test," regardless of how much time you actually spend inside the country or where you're a citizen, per the IRS's guidance on taxation of nonresident aliens. FIRPTA withholding under IRC § 1445 only applies to sales by foreign persons, and a green card holder isn't one — so you'd sign a standard nonforeign-person certification at closing and no FIRPTA withholding would apply. Confirm your specific status with a tax preparer if your situation involves dual residency or a foreign spouse, since ownership structure can complicate this.
I sold vacant land in South Carolina and actually lost money on it after 20 years of property taxes — why did the title company still withhold 15% under FIRPTA?
Because FIRPTA withholding is calculated on your gross sale price, not your profit or loss — the buyer withholds 15% of the full "amount realized" under IRC § 1445(a) regardless of whether you made or lost money on the property, and South Carolina's separate nonresident withholding (7% of gain for individuals, or of the amount realized if you didn't provide a gain affidavit, under S.C. Code § 12-8-580) works the same way. The fix is to file a US tax return for the year of the sale — using the Form 8288-A statement you should have received showing what was withheld — to claim a refund of the difference between what was withheld and what you actually owed, which in a loss scenario could be close to the entire withheld amount. You could also have applied for a Form 8288-B withholding certificate before closing to reduce the withholding up front instead of recovering it afterward.
What's the actual difference between FIRPTA withholding and the capital gains tax I might owe on the sale?
FIRPTA withholding is a mandatory collection mechanism — cash the buyer takes out of your proceeds at closing and sends to the IRS as a deposit against whatever you might owe, calculated on your gross sale price under IRC § 1445(a). Capital gains tax is your actual tax liability, calculated on your profit (sale price minus your basis and selling costs), determined when you file your US tax return for the year. The two aren't the same number, which is exactly why over-withholding is common and refunds are routine.
Who actually sends the FIRPTA money to the IRS — me, or the buyer, or the title company?
The buyer, legally — FIRPTA makes the buyer (the "transferee") the withholding agent responsible for withholding and remitting the tax within 20 days of closing via Forms 8288 and 8288-A, per the IRS's Form 8288 instructions, and a buyer who fails to withhold can be held personally liable for the tax. In practice, the title or escrow company handling the closing usually manages this on the buyer's behalf as a routine closing-table function, similar to how they handle other prorations and payoffs — you as the seller aren't the one filing this particular paperwork, though you will want to make sure you receive the stamped Form 8288-A showing what was withheld, since you'll need it to file your own return.
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or professional advice. Laws and regulations vary by jurisdiction and change over time. Always consult with qualified professionals before making land transfer or purchase decisions. Jerez Land is not responsible for actions taken based on this information.