FIRPTA (Foreign Investment in Real Property Tax Act)

A 1980 US federal law requiring buyers of US real property from foreign sellers to withhold 15% of the gross sale price (10% in certain lower-value owner-occupied cases) and remit it to the IRS via Forms 8288 and 8288-A. The withheld amount is credited against the foreign seller's actual tax liability on the eventual capital-gains filing. FIRPTA is the primary mechanism by which the US enforces capital-gains tax on non-residents disposing of US real estate; failure to withhold makes the buyer personally liable. Foreign sellers typically apply for a withholding certificate (Form 8288-B) to reduce or eliminate the withholding if their actual tax liability is lower. FIRPTA applies to individuals and to US real-property holding corporations (USRPHCs).