đź“ť FIRPTA Part 2: How to Get Ahead Before Opening Escrow

May 27, 2025
|In Uncategorized
|By Corin Clement

In Part 1, we covered the basics of FIRPTA—the federal law that requires 15% withholding when a foreign seller transfers U.S. real estate. Now, let’s talk strategy.

As a real estate agent, you play a key role in avoiding FIRPTA-related delays. By partnering closely with your escrow officer and preparing early, you can keep deals on track and stress levels low.

Here’s how you can make a big difference:

✅ 1. Confirm Seller’s Residency Status Early

Get clarity from the start:

  • Ask the seller if they are a U.S. citizen or resident alien.

  • If they’re not, notify escrow and flag the file for FIRPTA withholding.

  • Help your seller gather one of the following:

    • A Certification of Non-Foreign Status (if applicable).

    • Or Form W-8BEN (for foreign sellers).

🧠 2. Educate and Set Expectations

Don’t let FIRPTA be a surprise:

  • Explain that FIRPTA is the buyer’s legal responsibility, but escrow manages the process.

  • Let both sides know that withholding is mandatory unless:

    • The property is under $300K and buyer will live there.

    • The seller gets an IRS withholding certificate (Form 8288-B).

  • Encourage foreign sellers to apply for Form 8288-B as early as possible to avoid delays.

  • Escrow can refer the seller to a third-party withholding specialist (a cost typically paid through escrow).

🤝 3. Coordinate Early with Escrow

Get escrow involved early:

  • Share the listing agreement and executed contract as soon as possible.

  • Provide seller info (name, foreign/domestic status).

  • Let escrow know if FIRPTA or California FTB withholding applies.

🖊️ 4. Ensure Required Forms Are Completed

Accuracy matters:

  • Confirm the seller completes:

    • Certification of Non-Foreign Status, if applicable.

    • FTB Form 593 – required in nearly all California real estate transactions.

  • If the sales price is under $300K and the buyer intends to live in the property, make sure they sign the occupancy certification.

🔄 5. Help Keep the Deal Moving

Stay in the loop and follow up on:

  • Whether the IRS withholding check (15%) is being prepared.

  • Whether escrow is submitting Forms 8288 & 8288-A.

  • Whether a Form 8288-B certificate is pending—this can delay closing until the IRS responds.

đź“Ł Bottom Line:
Agents who are proactive about FIRPTA can save time, reduce confusion, and build trust with both buyers and sellers. Your role in preparing the file and guiding clients through the process is invaluable to the escrow team—and to the success of the transaction.