How FIRPTA works in Georgia if you sell a property as a foreign seller

FIRPTA in Georgia applies exactly the same way it does anywhere else in the country, because it is a federal law, not a state one. It kicks in when the seller of U.S. real estate is a "foreign person" for tax purposes: an individual who is not a U.S. citizen or resident for tax purposes, or a foreign entity.

The key point is that FIRPTA does not depend on whether you actually made a profit on the sale. It is calculated on the total sale price, not on the gain. That means even if you sold at a loss or with a small gain, the buyer still has to withhold the percentage the law requires, unless specific exceptions apply.

The legal responsibility to withhold and report falls on the buyer, not the seller. This surprises many foreign sellers who assume the paperwork is entirely their own. In practice, it is usually the title company or closing agent who coordinates the withholding, but the buyer is the one who remains legally responsible to the IRS if it is not done correctly.

The standard FIRPTA withholding rate is 15% of the total sale price. That rate went up from 10% to 15% for transactions closing after February 17, 2016, so if you come across older articles mentioning 10%, they are outdated. There is one exception: if the property is being purchased for use as a residence and the sale price is $1,000,000 or less, the withholding rate can drop to 10%.

The buyer reports the withholding to the IRS using Form 8288, "U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests." Along with that form, the buyer files Form 8288-A, which documents the seller and the amount withheld. Both must be sent to the IRS within 20 days of the property transfer date. The IRS stamps a copy of Form 8288-A and sends it back to the seller, who needs it to claim credit for that withholding on their tax return.

A common mistake is assuming the withholding is the final tax. It is not. It is an advance. When the foreign seller files their tax return for that year with the IRS (usually Form 1040-NR), they calculate the actual tax owed on the gain from the sale. If that tax is lower than the 15% withheld, the IRS refunds the difference. If it is higher, the seller owes the remaining balance.

If you know in advance that your actual tax will be lower than the 15% that would be withheld — for example, because your original purchase price was high and the gain is small, or because you have losses to offset — you can ask the IRS for a reduced withholding certificate using Form 8288-B before closing. This form lets you request that a smaller amount be withheld, instead of waiting months to recover the excess after the sale.

The 8288-B process takes time. The IRS generally responds within 90 days, so it needs to be started early, not the week before signing. If the certificate does not arrive in time for closing, the standard 15% withholding applies anyway and the difference gets recovered later, when the tax return is filed.

This is the most common reason a closing with a foreign seller gets delayed: nobody started the reduced withholding request with enough time. If you are planning to sell and know your actual gain is low, talking to an accountant or tax attorney before listing the property can save you months of waiting to get your money back.

For a foreign seller in Atlanta or anywhere in Georgia, FIRPTA does not change the sale process itself, but it does change how much money you receive on closing day. If you sell a $300,000 property, the buyer withholds $45,000 before you see a dollar, regardless of how much you actually profited from the deal. That money does not disappear, but it is not immediately available either.

That is why it is important to plan the sale with this withholding in mind. If you need the full proceeds from the sale for another purchase right away, FIRPTA can significantly affect your cash flow. Coordinating with the title company, an accountant, and, if applicable, starting Form 8288-B early is the difference between an orderly sale and an unpleasant surprise at the closing table.

No agent or title company can skip this withholding for convenience. It is a federal requirement, and a buyer who fails to apply it correctly can be held personally liable to the IRS for the amount that should have been withheld. That is why both buyers and sellers in transactions involving a foreign party should confirm tax status at the start of the contract, not at the end.