Repatriation after real estate sale

What is FIRPTA?

FIRPTA = U.S. federal law requiring the buyer or closing agent to withhold 15% of the sale price from a non-U.S. resident seller. No exemptions for Canadians — 15% is withheld, period.

Withholding amount: 15% of GROSS sale price, not 15% of profit. Example: you sell $500,000, $75,000 is withheld immediately.

Closing process

1. Florida real estate sale negotiated, contract signed
2. Closing agent or Florida attorney sends FIRPTA form to seller (withholding notice)
3. At closing: net proceeds = price − commission − closing costs − 15% FIRPTA withholding
4. Withholding sent to IRS via Form 8288 (Paid to Individuals Statement)
5. Seller receives net balance, MINUS the $75,000 (if $500,000 price)

Reducing withholding with Form 8288-B

If your actual federal tax on gain < 15% withholding, you can request reduction.

Conditions:

• Actual gain < 15% of sale price (low profit or loss)
• Request BEFORE closing (Form 8288-B to buyer/closing agent)
• Timing: ideally 90+ days before closing (IRS verification)

Example: sale price $500,000, you purchased $450,000 10 years ago, gain = $50,000. Federal tax ~12%, so 15% withholding is excessive. Request 8288-B to reduce to ~$60,000 withheld instead of $75,000.

Canadian vs US tax on gain

2026 Canada rule: Capital gain inclusion = 66.7% (new rule). You report real estate gain on CRA return, pay federal/provincial tax.

U.S. rule: Non-resident pays federal tax on gain. Federal rate ~15% (long-term capital gain 0%/15%/20% depending on income).

Foreign Tax Credit: You can claim Foreign Tax Credit (FTC) on Canadian return for U.S. tax paid. But if Canada tax > U.S. tax (likely with 66.7% inclusion), you owe difference to CRA.

Post-sale steps: repatriate funds

1. Closing complete, net proceeds received (MINUS 15% withholding)
2. Funds in USD account (escrow or buyer's bank)
3. Decide: keep USD in US, convert to CAD, or split
4. If wiring to Canada: Wise, OFX, forward contract recommended for large amounts
5. File gain with CRA + IRS (two-country return filing)
6. Claim FTC on Canadian return if U.S. tax paid > $0

Planning summary

6–12 months before sale: Consult U.S. tax attorney + cross-border Canadian lawyer/accountant

Get quotes: Canada federal/provincial tax, U.S. federal tax, FTC benefit

Before closing: If low gain, request 8288-B withholding reduction

After closing: Complete Form 8288 (closing agent), file CRA/IRS, plan fund repatriation