FIRPTA- a Federal law requires a foreign seller of a USRPI (United States Real Property Interest) to pay a capital gains tax upon. the sale of USRPI.

If you buy U.S. real estate from a foreign person, you may be required to withhold 10% of the amount realized from the sale. The amount realized is normally the purchase price.

Who pays FIRPTA withholding?

  • The buyer
  • In most cases, the buyer is responsible for making sure the IRS receives its money within 20 days. The buyer usually is the withholding agent and is ultimately responsible for sending the funds to the IRS

Who is required to collect and remit 15% of the gross sales price at closing to the IRS?

  • The transferee
  • For U.S. property dispositions subject to FIRPTA, the transferee (purchaser) is required to withhold and remit to the IRS 15% of the gross sales price to ensure that any taxable gain realized by the seller is actually paid.

United States IRS

Hawaii State Tax Online