FIRPTA is one of those topics that creates a lot of anxiety among international property owners — and the anxiety is understandable, because the mechanics are unfamiliar. But once you understand how the system actually works, it's more manageable than it initially appears. Let me walk you through it clearly, because understanding FIRPTA before you buy is just as important as understanding it when you're ready to sell.

I'm Fannie Fleming, REALTOR at ERA Live Moore Real Estate, a 30-year veteran real estate agent in Winston-Salem NC real estate with over 1,100 homes sold and 28 Google 5-star reviews. Here is how FIRPTA and related tax rules apply to foreign national sellers in 2026.

What FIRPTA Is and How the Withholding Works

Q: What exactly does FIRPTA require when I sell my Winston-Salem property? The Foreign Investment in Real Property Tax Act (FIRPTA) was enacted to ensure that foreign nationals who profit from the sale of U.S. real property pay U.S. capital gains tax on those profits. The mechanism works through buyer withholding: when you sell your Winston-Salem property as a foreign national, the buyer (or more precisely, the buyer's closing agent) is required to withhold 15% of the gross sales price and remit it to the IRS within 20 days of closing.

This withholding is not a tax — it's a deposit against your tax liability. You then file a U.S. tax return (Form 1040-NR for non-resident aliens) reporting the actual capital gain from the sale. Your actual capital gains tax due is calculated, and if it's less than the amount withheld, the IRS refunds the difference. If it's more, you pay the balance.

FIRPTA Exemptions: When Withholding Is Reduced or Eliminated

Q: Are there situations where the 15% withholding doesn't apply? Yes, and these exemptions are important to understand when you're structuring the purchase that will eventually become a sale:

Sales price $300,000 or less + buyer personal residence use: If the total sales price is $300,000 or under AND the buyer is purchasing for personal residential use (not investment), withholding is 0%. This exemption is particularly relevant for foreign national sellers of starter homes or entry-level investment properties in communities like Pfafftown, where traditional-style homes and properties over $600K span a wide range, and Summerfield, where higher-value properties may exceed this threshold.

Sales price $300,001 to $1,000,000 + buyer personal residence use: The withholding rate drops to 10% in this range if the buyer intends personal residential use. Many Clemmons properties fall here — Clemmons homes over $600K with distinctive styles like Dutch Colonial and transitional-style homes often land in this bracket.

Sales price over $1,000,000: Full 15% withholding applies regardless of buyer intent. This affects sellers of premium properties in communities like Bermuda Run, where homes between $400K and $600K and traditional-style properties have appreciated significantly.

"The FIRPTA conversation is one I have early with every international buyer — because how you structure the purchase today affects what happens at the sale years from now. It's not a reason to not buy; it's a reason to plan correctly." — Fannie Fleming, ERA Live Moore Real Estate

Reduced Withholding Certificate: Applying to Pay Less at Closing

Q: What if my actual tax liability is much less than 15% of the sales price? You can apply to the IRS for a Withholding Certificate (Form 8288-B) before or immediately after closing that reduces the withholding to your actual estimated tax liability. For sellers with significant deductible basis (original purchase price plus improvements plus selling costs), the actual capital gains tax may be substantially less than 15% of gross proceeds. The IRS processes these applications in 90 days, during which time the withheld funds are held in escrow rather than being remitted. This process requires a U.S. CPA experienced in FIRPTA compliance.

In communities where appreciation has been strong — Lewisville with its higher-value homes and French Provincial-style properties, or Advance with homes between $400K and $600K — the gain at sale may be substantial enough that proactive FIRPTA planning genuinely matters.

Check the Winston-Salem home value reports for current appreciation data, review the buyers guide Winston-Salem NC 2026, and contact Fannie Fleming real estate at ERA Live Moore Real Estate to discuss how FIRPTA fits into your overall investment plan.