Here is an example of how much you could get back with a FIRPTA withholding certificate. For details, and to run the numbers for a specific property sale, check out our FIRPTA calculator
Let’s say you are selling a property for $400,000, which you bought for $275,000. For the sake of this example, we will assume you invested $30,000 into improvements, with closing costs of 6%, or $24,000. In this case, your gain would be $71,000.
$60,000 15% of the $400,000 Selling Price
– $14,200 Your Gain of $71,000 x Maximum Capital Gains of 20%
= $45,800 Refunded from Title Company
Therefore, $60,000, which is 15% of selling price, would be withheld and put in escrow at the time of closing. Next, a withholding certificate would be filed with the IRS. 45 to 90 days later, the IRS would send a letter allowing the title company to release $45,800.
Then, you would have to file a tax return in the next year to get back all or a portion of the remaining $14,200. Please note that this depends on any other U.S. source income, as well as how high the gain is.
Still have questions? For more information, please see our video about FIRPTA.