Selling a Tulsa House When You Are Not a US Resident

You moved abroad years ago and kept the Tulsa house, or you inherited it and you live overseas. The sale is going smoothly and then the closing agent mentions FIRPTA and a figure that is fifteen per cent of the whole sale price. Not fifteen per cent of your profit. Fifteen per cent of everything, held by the IRS.

This article covers who counts as a foreign person, how the withholding actually works, the two exceptions that reduce or remove it, the form that can cut the figure before closing, and why your closing agent will not budge on any of it.

Who is a foreign person

Narrower than people fear, and worth establishing before anybody panics.

A US citizen is not a foreign person, wherever they live. Nor is a green card holder. Nor is somebody who meets the substantial presence test, which is a day-counting test for time spent in the United States.

So an American who has lived in Spain for a decade is generally not caught by this. A non-resident foreign national who owns a house in Tulsa generally is, and so, in many cases, is a foreign heir who has inherited one.

Where the seller is not a foreign person, they sign a certification of non-foreign status under penalties of perjury, and no withholding is required. The buyer can rely on it unless they know it is false.

How the withholding works

FIRPTA sits in section 1445 of the Internal Revenue Code. It requires the buyer to withhold a percentage from a foreign person's sale of US real property and send it to the IRS.

The percentage is applied to the amount realized, which means the gross sale price. Not the gain. Not what reaches your pocket after the mortgage.

That distinction is the whole difficulty. On a 260,000 dollar sale, fifteen per cent is 39,000 dollars, and that is withheld whether your actual tax liability is 39,000 dollars, 5,000 dollars, or nothing at all because you sold at a loss.

The buyer, or the buyer's settlement agent, is legally responsible for withholding and personally liable for tax that should have been withheld and was not. That is why closing agents apply this rigidly and why arguing with them achieves nothing. They are not being difficult, they are protecting themselves from a liability that is genuinely theirs.

The buyer reports it on Forms 8288 and 8288-A within twenty days of the sale.

The two exceptions

Both depend on what the buyer intends to do with the property, which is the part sellers find counter-intuitive.

No withholding, where the amount realized is 300,000 dollars or less and the buyer acquires it for use as a residence. The buyer must be an individual, and the buyer or a member of their family must have definite plans to reside there for at least fifty per cent of the days the property is used during each of the first two twelve-month periods after the transfer, disregarding days it is vacant.

Ten per cent instead of fifteen, where the amount realized is 1,000,000 dollars or less and the buyer acquires it for use as a residence on the same basis.

Two points worth being precise about. An exception means nothing is withheld; a reduced rate still means money is withheld, just less of it. And a cash buyer who is not going to live in the house cannot give you either. An investor purchase is withheld at fifteen per cent, and that includes a purchase by us.

Reducing it before closing

There is a route that most sellers never hear about until it is too late to use.

Form 8288-B is an application for a withholding certificate, asking the IRS to reduce or eliminate the withholding because the actual tax due will be less than the amount that would otherwise be held. Either the buyer or the seller can apply.

The catch is timing. This has to be under way well before closing to be useful, which means it belongs at the beginning of your process rather than at the end. A seller who starts three days before closing has no realistic route to it.

The alternative is to accept the withholding, file a US tax return for the year, and claim the difference back as a refund. That works, and non-resident returns claiming a FIRPTA credit commonly take several months to produce a refund. If you were relying on those funds, plan for the delay rather than being surprised by it.

You will need a US taxpayer identification number to do any of this, and obtaining one takes time of its own. That is another reason to start early.

What to do, in order

1. Establish your status honestly before anything else. Citizen, green card holder, substantial presence, or foreign person
2. Speak to a CPA who handles non-resident sellers. Not a general accountant. This is a specialism and the difference shows
3. Get the taxpayer identification number under way early if you do not have one
4. Decide about Form 8288-B at the start, because it is useless at the end
5. Tell your closing agent early. Discovering this at the table is how closings get delayed
6. Work out your actual figure. Sale price, basis, costs and any depreciation if it was ever rented, which our article on selling a long-held rental covers
7. Check the state position too. Federal withholding is not the only possible layer, and your CPA should confirm what Oklahoma requires

Where we come in

Be clear-eyed about one thing: buying from us does not reduce your withholding. The exceptions depend on the buyer using the property as a residence, and we do not. A sale to us is withheld at fifteen per cent of the gross price. A family buying your house to live in, at 300,000 dollars or less, would face no withholding at all. That is a genuine reason to prefer an ordinary sale and we would rather say it plainly.

Where we are useful is the same narrow set as always, made narrower by distance: a house that needs work you cannot manage from another country, a property standing empty and deteriorating while probate runs, or a situation where certainty matters more than the last few thousand dollars. Our page on selling a Tulsa house from out of state covers the practical side of a remote sale, and our page on selling an inherited house covers the probate layer that frequently comes with this.

Whichever route you take, get the CPA involved before you accept an offer. On a withholding of this size, that advice is worth more than the difference between any two offers you will receive.

The short version

• FIRPTA requires a buyer to withhold from a foreign person's sale of US real property, under section 1445
• US citizens, green card holders and those meeting the substantial presence test are not foreign persons and sign a certification instead
• The default is 15 per cent of the gross sale price, not of your gain
• No withholding where the buyer acquires it as a residence and the amount realized is 300,000 dollars or less, with a residence-use test the buyer must meet
• 10 per cent where the buyer acquires it as a residence and the amount realized is 1,000,000 dollars or less
• The buyer is personally liable for tax not withheld, which is why closing agents will not negotiate
• Form 8288-B can reduce it before closing, but only if started early
• Otherwise you file a return and wait months for the refund
• Selling to an investor, including us, means the full 15 per cent