Who is responsible for FIRPTA withholding, the buyer or the seller?
The buyer. That is the part most people get wrong, and it is the whole design of the regime: on a purchase of US real property from a foreign seller, the obligation to withhold from the proceeds and account for the amount sits with the purchaser, with their agents involved in seeing it done. The seller's own tax position is settled separately and later. A buyer who relies on the seller to deal with it has discharged nothing, and a buyer who completes without having established the seller's status has taken the risk personally rather than avoided it.
Do I have to withhold if the seller says they are not foreign?
Not on their word. The obligation is triggered by the seller being a foreign person, so the buyer needs that status established and documented rather than asserted, and the documentation is what stands behind a decision not to withhold. Establish it before closing, because the withholding is taken out of the sale proceeds at closing — once the money has gone to the seller, a buyer who should have withheld is exposed with nothing left in hand to cover it. Ask for the status documentation at the same stage as the title work, not in the closing week.
Does my real estate agent handle the withholding return?
Agents are involved, and in practice much of the mechanics runs through the closing, but the obligation is the buyer's and it does not transfer by being delegated. Make it explicit in the closing instructions who prepares the withholding return, who holds the funds out of the proceeds, and who remits them, then get the confirmations back in writing. Where the parties assume it is being handled somewhere in the chain, the usual outcome is proceeds released in full and no return filed — and the party the IRS looks to for that is the purchaser.
I am a foreign seller — is anything filed in my name?
Not this return. It is the buyer's withholding return, and the amount remitted under it is credited against your eventual US tax on the disposal. Your side of the transaction is separate: you account for the gain and set the amount withheld against the tax arising on it, and that is where the excess comes back if too much was held. The distinction matters because withholding is applied to the sale price rather than the gain, so it routinely exceeds the tax that is finally payable.
Can the withholding be reduced before closing?
There is a certificate route, and it exists precisely because withholding is applied to the sale price rather than the gain and so routinely exceeds the tax that will actually be due. Applying for it is a pre-closing exercise with its own evidence requirements: the seller's basis, the costs of the disposal and the expected tax on the gain all have to be supported. Start it as soon as a sale is contemplated rather than once a closing date is fixed, because the timetable is the usual reason the route is not taken and a large part of a foreign seller's cash sits held instead.
What happens if the buyer never withheld anything?
The purchaser is the party the obligation rests on, so the gap is theirs to fix, and it is much harder after closing than before. The proceeds have gone to the seller, which means the buyer is accounting for an amount it no longer holds, and its only practical recourse is against the seller under the contract. Where this comes to light late, the work is to establish the seller's status, quantify what should have been withheld and remitted, and settle the position — then check whether the seller's own filing has already dealt with the tax on the gain.
How do I claim tax treaty benefits?
Two moments, and the earlier one matters more. Before a payment is made, you give the payer a declaration so they withhold at the treaty rate rather than the domestic one — a W-8BEN for a US payer, an NR301 for a Canadian payer, a residency certificate and Form 10F for an Indian one. After the year ends, you claim the position on a return, and the United States often wants it disclosed there in its own right. Claiming late means asking for a refund instead. See NR301 declarations.
Do I pay tax twice on a foreign dividend?
Not at full rates if the relief is claimed. The paying country usually withholds at source, capped by treaty where one applies and the paperwork is in place; your residence country then taxes the dividend and credits the foreign withholding against its own charge. Where the withholding exceeded the treaty rate because no declaration was filed, the excess is recovered from the paying country, not credited at home. See the dividends article.
