FIRPTA Withholding Percentage

Effective February 16, 2016, if the property is not purchased as a residence for the buyer and/or if the sale price is over $1,000,000, the FIRPTA withholding is 15% of gross sale proceeds. In some situations (primarily in sales by entities) the withholding is 35% of the gain. While the new law does not define when property is purchased for use as a residence, presumably property is purchased as a residence if the buyer has definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of the sale (calculated without including the number of days the property will be vacant).