Why You Need an Experienced Buyer’s Agent: The FIRPTA Factor

There’s a saying in real estate: “You don’t know what you don’t know.”
Buying a home is exciting, but it’s also full of potential pitfalls that many buyers never see coming, until it’s too late. That’s why having an experienced real estate agent on your side isn’t just helpful, it’s essential.

Let me ask you a question:
How many of you have ever heard of FIRPTA?
Better yet, how many of you truly understand what it is and how it could impact you as a buyer — even if you’re a U.S. citizen?

If you’re scratching your head, you’re not alone. Most people haven’t heard of it until they’re already knee-deep in a transaction. And by then, it can cost you thousands of dollars and a massive headache.

What is FIRPTA?

FIRPTA stands for the Foreign Investment in Real Property Tax Act. It’s a federal law designed to ensure that foreign individuals and entities pay their share of U.S. taxes when they sell real estate here.

Here’s how it works:

• If the seller of a property is considered a foreign person, the IRS requires 15% of the sales price to be withheld at closing and sent directly to the IRS.
• This isn’t an extra tax; it’s a way for the IRS to collect taxes upfront, since the foreign seller may not have other ongoing tax obligations in the U.S.

Why Buyers Should Care

You might be thinking, “Okay, but I’m buying a house — I’m not the one selling. Why does this matter to me?”

Here’s the surprising part:
The buyer is legally responsible for making sure FIRPTA withholding happens.

“If a buyer acquires a U.S. real property interest from a foreign person, the buyer (or transferee) must deduct and withhold a tax equal to 15% of the amount realized on the disposition of the property.”

Section 1445(a) of the Internal Revenue Code

If FIRPTA applies and the proper amount isn’t withheld at closing, the IRS can come after you, the buyer, for the unpaid taxes — plus penalties and interest. Imagine buying your dream home only to discover later that you owe the IRS tens of thousands of dollars because the seller was a foreign person and the process wasn’t handled correctly.

This is exactly why it’s so important to have an experienced agent who knows to ask the right questions early in the process.

The Power of Asking Questions Up Front

A skilled agent will:

• Verify whether FIRPTA might apply before you go under contract.
• Work closely with the title company to ensure all the correct paperwork and affidavits are in place.
• Protect you by making sure the required withholding is done correctly if FIRPTA does apply.

Without this guidance, you might never even think to ask about FIRPTA — and by the time the issue surfaces, it’s too late.

One Example Among Many

FIRPTA is just one of many moving parts in a real estate transaction. There are countless other scenarios — from title issues to inspection surprises to appraisal challenges — where having an experienced professional on your side can save you time, money, and stress.

Buying a home is one of the biggest investments you’ll ever make. Don’t take chances.
Work with someone who knows what to look for, what questions to ask, and how to protect your interests from start to finish.

Final Thought

You don’t need to know every law, tax code, or regulation involved in buying a home — that’s my job.
What you do need is the wisdom to partner with an experienced agent who does know.

FIRPTA may sound like just another piece of alphabet soup in the real estate world, but it’s a perfect example of why you don’t know what you don’t know — and why having the right guide makes all the difference.

(For additional information on FIRPTA, visit https://www.irs.gov/individuals/international-taxpayers/definitions-of-terms-and-procedures-unique-to-firpta and https://www.irs.gov/individuals/international-taxpayers/firpta-withholding)