Under FIRPTA, when a seller who is a foreign person under the tax code sells US real estate, the buyer generally must withhold 15% of the gross sale price and send it to the IRS. California withholds another 3 1/3% of the price on Form 593, so on a $15 million Beverly Hills sale about $2.75 million can be held back at closing unless a withholding certificate or an exemption applies.
You're selling, or buying from, a seller who is a foreign person for tax purposes and need to know what escrow will hold back and how to reduce it.
At a glance
| FIRPTA withholding rate | 15% of the amount realized (10% before February 17, 2016) |
|---|---|
| Reduced rates | None if a residence at $300,000 or less; 10% if a residence at $1 million or less |
| Who withholds | The buyer, as withholding agent |
| Federal forms | 8288 and 8288-A, generally within 20 days of the transfer; 8288-B to apply for a withholding certificate |
| California withholding | 3 1/3% of the sales price, or the alternative calculation on gain (2026 Form 593) |
| Form 593 deadline | 20th day of the month after escrow closes |
What FIRPTA withholding takes from a Beverly Hills sale
FIRPTA, the Foreign Investment in Real Property Tax Act, makes the buyer collect tax at the closing table when the seller is a foreign person. The IRS sets the general withholding rate at 15% of the amount realized, which in plain terms is the gross sale price. It was 10% for sales before February 17, 2016.
The point most sellers miss is the base. Withholding is figured on the price, not on your profit. A seller who bought high and sells close to cost still has 15% of the full price held back. On a home in the Beverly Hills range, that's a seven-figure sum out of reach until the IRS process runs its course.
Who counts as a foreign person under FIRPTA
FIRPTA turns on tax status, not on where anyone was born or lives. The test is whether the seller is a foreign person under the US tax code. A seller who isn't one can give the buyer a certification, signed under penalties of perjury, stating that they are not a foreign person, and no FIRPTA withholding is then required. Your CPA or tax attorney decides which side of that line you're on.
Why FIRPTA withholding is a buyer's problem too
In most cases the buyer is the withholding agent. The IRS says the buyer must find out whether the seller is a foreign person, and a buyer who fails to withhold may be held liable for the tax. That's why escrow may ask every seller for a certification of status, so no one is singled out.
FIRPTA rates and the residence exceptions
The IRS allows two breaks for homes bought as residences, but both have price ceilings far below a typical sale in this market. The table sets them out.
| Sale price (amount realized) | Buyer acquires it as a residence | FIRPTA withholding |
|---|---|---|
| $300,000 or less | Yes | None |
| Over $300,000 to $1,000,000 | Yes | 10% |
| Over $1,000,000 | Either way | 15% |
| Any price | No | 15% |
The $300,000 residence exception
No withholding is required if an individual buyer acquires the home as a residence for $300,000 or less. The buyer or a family member must plan to live there at least half the days it's used in each of the first two 12-month periods after the sale. In Beverly Hills, where Zillow put the city's typical home value at $3,676,482 in September 2026, this rule won't apply to a house.
The $1 million reduced FIRPTA rate
A 10% rate applies when the buyer acquires the property as a residence and the price is $1 million or less. Above $1 million the full 15% applies, and that covers every sale at the luxury end of Beverly Hills. A buyer's plan to live in the home makes no difference at these prices.
FIRPTA withholding worked at $5 million and $15 million
Here is what escrow can hold back on two sale prices, before any certificate or exemption. The federal figure is 15% of the price. The California figure is the standard 3 1/3% (0.0333) of the price from the 2026 Form 593 instructions.
| Sale price | FIRPTA (15%) | California (3 1/3%) | Total held back | Seller receives before other costs |
|---|---|---|---|---|
| $5,000,000 | $750,000 | $166,500 | $916,500 | $4,083,500 |
| $15,000,000 | $2,250,000 | $499,500 | $2,749,500 | $12,250,500 |
A $5 million sale in the Beverly Hills flats
On $5 million, $916,500 is withheld before loan payoff, commission and transfer tax. If there's a mortgage, the lender is paid in full from what's left, so a seller with a large loan can find the withholding eats most of the cash. Run your own payoff against these numbers before you price the house.
A $15 million sale in Bel Air
At $15 million, $2,749,500 is withheld. In Bel Air, which is in the City of Los Angeles, the sale also carries the city's Measure ULA transfer tax on the whole price. The mansion tax calculator shows that figure for your price, and it's separate from FIRPTA, so add both to your net sheet.
Redo the FIRPTA math for your own price
Multiply your expected price by 0.15 for FIRPTA and by 0.0333 for California. Subtract both, then your loan payoff, from the price. If the cash left won't cover your plans after closing, the Form 8288-B application below is worth discussing with your adviser now, not in escrow.
California withholding on top of FIRPTA: Form 593
California runs its own withholding under Revenue and Taxation Code Section 18662. The Franchise Tax Board's 2026 Form 593 instructions say withholding is required when California real estate is sold or transferred, and the real estate escrow person must tell buyers about it. Unlike FIRPTA, it isn't limited to foreign sellers.
The 3 1/3% rate and the alternative calculation
The standard California amount is 3 1/3% of the sales price. The seller can instead elect the Alternative Withholding Calculation, which is the seller's tax rate times the estimated gain. The 2026 rates for that election are in the table.
| Seller type | Alternative withholding rate on gain (2026) |
|---|---|
| Individual | 12.3% |
| Corporation | 8.84% |
| S corporation | 13.8% |
| Trust | 12.3% |
| Non-California partnership | 12.3% |
Here's how to test it. On a $5 million sale, the standard amount is $166,500. If an individual seller's estimated gain were $1 million, the alternative would be $123,000. If the gain were $2 million, it would be $246,000, and the standard 3 1/3% would be the smaller figure. The election pays off only when the gain is small against the price.
California exemptions on Form 593
No California withholding is required in several cases, including when the home was the seller's principal residence under IRC Section 121, when it was last used as the principal residence, when the sale produces a loss or zero gain, or when the price is $100,000 or less. A seller who knowingly signs a false exemption certificate faces a penalty of $1,000 or 20% of the required withholding, whichever is greater.
Cutting FIRPTA withholding with Form 8288-B
Form 8288-B is the application to the IRS for a withholding certificate that reduces or eliminates FIRPTA withholding. It's the tool for the seller whose tax will be far below 15% of the price, for example because the gain is small.
Filing Form 8288-B before closing
If an application is pending when the sale closes, the IRS says the withheld amount doesn't have to be reported and paid immediately. Escrow holds it, and the buyer has until 20 days after the IRS mails its decision to send it in. That's why the timing matters: file before closing and the money stays in escrow, not at the IRS.
Treaty and nonrecognition notices
The IRS also lets a seller avoid withholding by giving notice that a nonrecognition provision or a tax treaty applies. These are technical claims, and whether one fits your sale is a question for a US tax adviser, not for the listing agent.
The FIRPTA closing calendar and forms
Each form has a set deadline. Escrow usually prepares the filings, but the legal duty sits with the buyer for FIRPTA, and missing a date is the buyer's risk.
| Form | Who files | What it does | Deadline |
|---|---|---|---|
| Non-foreign certification | Seller to buyer | States under penalties of perjury the seller isn't a foreign person | At or before closing |
| Form 8288-B | Seller (or buyer) | Applies for a withholding certificate | Before closing, to keep funds in escrow |
| Form 8288 | Buyer | Reports and pays FIRPTA withholding | Generally the 20th day after the transfer |
| Form 8288-A | Buyer | One statement for each foreign seller | With Form 8288 |
| Form 593 | Escrow (REEP) | Reports California withholding | 20th day of the month after escrow closes |
How escrow handles the FIRPTA funds
Escrow collects the seller's status certification early, holds the withheld amount from the seller's proceeds, and sends it with the forms. If a Form 8288-B application is pending, the money waits in escrow until the IRS mails its decision. Ask your escrow officer at the start how they handle a pending application, since it affects when you see the cash.
A FIRPTA checklist for selling a Beverly Hills home
Work through this before you list, not after you accept an offer. Pair it with the other seller costs on our guide to selling a Beverly Hills home and the yearly tax picture on the Beverly Hills property tax page.
- Ask your CPA if you count as a foreign person under the tax code for this sale, and whether the owner is you or an entity.
- Estimate the withholding: 15% of the price federally and 3 1/3% for California.
- Estimate your actual gain and tax with your adviser, and compare.
- If the gap is large, prepare Form 8288-B so it can be filed before closing.
- Check whether a Form 593 exemption or the alternative calculation lowers the California amount.
- Tell the escrow officer early which forms to expect.
Check with a CPA or tax attorney
This page describes how FIRPTA and California withholding work. It isn't tax or legal advice, and rules change. Have a US CPA or tax attorney confirm your status, your forms and your deadlines before you sign a listing agreement. A local agent can coordinate escrow timing around them; our featured Beverly Hills agent page is one place to start.
FIRPTA FAQs for Beverly Hills sellers and buyers
What is the FIRPTA withholding rate?
The IRS sets the general FIRPTA withholding rate at 15% of the amount realized, which is the gross sale price. It was 10% for sales before February 17, 2016. A reduced 10% rate applies only when the buyer acquires the home as a residence and the price is $1 million or less, so the full 15% applies to Beverly Hills luxury sales.
Who pays FIRPTA, the buyer or the seller?
The tax is the seller's, but the buyer is the withholding agent. The buyer must find out whether the seller is a foreign person, withhold from the price, and file Forms 8288 and 8288-A, generally within 20 days of the transfer. A buyer who fails to withhold may be held liable for the tax, which is why escrow may ask every seller to certify their status.
How much FIRPTA is withheld on a $5 million home?
At 15%, FIRPTA withholding on a $5 million sale is $750,000. California's standard 3 1/3% withholding adds $166,500, for a total of $916,500 held back from the seller's proceeds unless a withholding certificate or an exemption applies. A Form 8288-B application filed before closing can keep the federal amount in escrow while the IRS decides.
What is Form 8288-B?
Form 8288-B is the application to the IRS for a withholding certificate that reduces or eliminates FIRPTA withholding. If the application is pending at closing, the withheld amount stays with escrow and doesn't have to be paid to the IRS until 20 days after the IRS mails its decision. Your CPA prepares it based on the expected tax on the sale.
Does California have its own FIRPTA?
California has its own real estate withholding, reported on Form 593. It's 3 1/3% of the sales price, or the seller's tax rate times the estimated gain if the seller elects the alternative calculation. It applies to California real estate sales generally, not only foreign sellers, with exemptions such as a principal residence. The form is due the 20th day of the month after escrow closes.
How do I avoid FIRPTA withholding as a seller?
A seller who isn't a foreign person can give the buyer a certification, signed under penalties of perjury, saying so. A foreign seller can apply on Form 8288-B for a withholding certificate, or give notice that a nonrecognition provision or a tax treaty applies. Each route has rules, so have a US CPA or tax attorney confirm which one fits your sale.
Does FIRPTA apply to the whole price or just the gain?
The whole price. The IRS figures FIRPTA withholding on the amount realized, the gross sale price, not on the profit. A seller with a small gain can therefore have far more withheld than they'll owe. That gap is what a Form 8288-B withholding certificate is meant to close, and it's worth filing before closing.
Sources
- IRS: FIRPTA Withholding
- IRS: Exceptions from FIRPTA Withholding
- IRS: Instructions for Form 8288 (Rev. January 2026)
- IRS: Reporting and Paying Tax on U.S. Real Property Interests
- California Franchise Tax Board: 2026 Form 593 Instructions
- City of Los Angeles Office of Finance: Real Property Transfer Tax and Measure ULA FAQ
- Zillow Home Value Index, City of Beverly Hills, September 2026