Selling U.S. Real Estate as a Canadian? Don’t Overlook FIRPTA

If you're a Canadian resident selling U.S. real estate, you may be subject to the Foreign Investment in Real Property Tax Act (FIRPTA)— a U.S. tax rule with real consequences.

Here’s what you need to know:

📌 What is FIRPTA?

 FIRPTA is a U.S. tax law that requires foreign persons to pay tax on the disposition of U.S. real property interests. This typically includes the sale of a vacation home, rental property, or any other real estate held in the U.S.

👤 Who is affected?

Any non-U.S. person— including Canadians— selling U.S. real estate. Even if you don’t owe U.S. tax on the gain, withholding applies by default unless an exemption is obtained.

📍 Where does it apply?

Across the U.S.— from Florida condos to Arizona rentals, if you're a nonresident, FIRPTA applies.

📆 When does it apply?

At the time of sale. Typically, the buyer must withhold 15% of the gross sale price and remit it to the IRS, unless proper steps are taken in advance.

❓ Why does it matter?

FIRPTA withholding is not optional. Failing to plan ahead can tie up funds, create delays, or even lead to penalties. There may be ways to reduce or avoid withholding, but it requires timely action— often before closing.

✅ Proactive planning is key.

With proper advice, Canadian sellers can navigate FIRPTA efficiently and explore potential exemptions or reductions through IRS forms like 8288-B.

💬 If you’re a Canadian considering selling U.S. property, or advising someone who is, let’s connect. FIRPTA compliance doesn’t have to be a surprise— with the right guidance, it can be managed smoothly.