Chapter 04 · Sale
Loss Sale and FIRPTA Withholding Recovery
How to recover FIRPTA withholding if the property sale results in a loss.
Direct answer · 60-second summary
The 60-second version
- FIRPTA: 15% withholding on gross price
- Loss sale: negative gain
- Withholding applied even on loss
- Form 843: refund claim
- Deadline: 3 years after sale
- Required docs: contract, appraisal
- IRS refund: 6–12 months
- Foreign tax credit in Canada
Acronyms used in this guide
- FIRPTA — Foreign Investment in Real Property Tax Act
- IRS — Internal Revenue Service
Loss sale: withholding still applied
If US real estate sale results in loss (price < adjusted basis), FIRPTA withholds 15% of gross price anyway. No loss exemption.
Form 843: refund claim
File Form 843 (Claim for Refund) with IRS after closing. Include: Form 8288 (withholding), sale contract, appraisal, justification for loss (renovation costs, etc).
Deadline: 3 years after sale
Refund right = 3 years from sale date. After 3 years, Form 843 not accepted.
IRS processing and refund
IRS processes Form 843: 6–12 months. If approved, refund wired to seller's US bank. Early filing faster.
Every figure, rate, threshold, and deadline in this guide is drawn from a verifiable primary source listed at the bottom of the page. The article is updated whenever the underlying rules change, with a fresh review date stamped at the top.
Sources and references
Disclaimer
This guide is for educational purpose only.
For concrete decisions, consult a licensed attorney.