FIRPTA Withholding in Dallas: What Buyers Owe When the Seller Is a Foreign National

What does FIRPTA require from a Dallas buyer when the seller is a foreign national?

Under the Foreign Investment in Real Property Tax Act (IRC Section 1445), the buyer is legally responsible for withholding and remitting tax to the IRS when purchasing from a foreign seller. The standard withholding rate is 15% of the gross sale price. For homes priced at $1,000,000 or less where the buyer will use the property as a primary residence, the rate drops to 10%. The buyer must file IRS Form 8288 within 20 days of closing. In Dallas, the title company handles the mechanics, but the legal obligation belongs to the buyer.

By Paul Blair | October 18, 2026

Your offer got accepted, the option period is behind you, and closing is two weeks out. Then your title company drops something in your inbox that you weren't expecting: your seller is a foreign national, and under federal law, you are responsible for withholding a portion of the purchase price and sending it to the IRS.

Not the seller. Not your agent. You.

This catches buyers off guard in Dallas more often than most people realize. The Plano and Frisco corridors have drawn thousands of international executives and tech workers over the past decade, many of whom bought homes here and are now selling to return to their home countries. The DFW market has also attracted international real estate investors throughout the suburbs. When those sellers move on, the buyers who purchase from them inherit a federal withholding obligation under the Foreign Investment in Real Property Tax Act, commonly called FIRPTA.

Here is what you need to know before you reach the closing table.

Why the Buyer Holds the Withholding Obligation

FIRPTA was enacted in 1980 under IRC Section 1445 to ensure the IRS collects capital gains tax from foreign nationals selling U.S. real property. Because a foreign seller can simply leave the country after closing, Congress placed the withholding obligation on the one party who cannot easily disappear: the buyer.

If you buy a home from a foreign seller and fail to withhold and remit the required amount, the IRS can come after you personally for the full withholding balance, plus interest and penalties. Your seller may be long gone. You will not be.

The good news: you do not have to manage this alone. Title companies in Dallas, including Republic Title and Old Republic Title, both of which have DFW-specific FIRPTA teams, handle the paperwork mechanics on the buyer's behalf. But the obligation is still legally yours, which is why you need to understand what is happening and authorize the process.

How do you know if your seller is a foreign national?

In most transactions, you find out through the seller's disclosure or through a FIRPTA certification that the title company requests. At closing, the seller either signs a Non-Foreign Person Certification, confirming they are a U.S. person, or they cannot. If they cannot certify non-foreign status, withholding applies.

The Withholding Rates and When They Change

The standard FIRPTA withholding rate is 15% of the gross sale price, not the seller's gain. On a $600,000 home in Plano, that is $90,000 held from the seller's proceeds and remitted to the IRS.

Two situations reduce the rate:

The residential exception (10% rate)

If you plan to use the property as your primary residence and the purchase price is $1,000,000 or less, the withholding rate drops to 10%. For that same $600,000 Plano home, that is $60,000 instead of $90,000. You must make a written statement of your intended use at closing for this rate to apply.

If the purchase price exceeds $1,000,000, the full 15% applies regardless of how you intend to use the property.

Zero withholding with a Withholding Certificate

Before closing, a foreign seller can apply to the IRS for a Withholding Certificate (Form 8288-B), which can reduce or eliminate the required withholding if the seller's actual tax liability is lower than the standard rate would produce. This application takes time, often 60 to 90 days or longer, so it must happen well before closing. If the seller has applied but has not yet received the certificate, the withheld funds sit in escrow at the title company until the IRS responds.

The paperwork that follows closing

Once closing happens, the buyer, typically through the title company acting as agent, must file IRS Form 8288 and Form 8288-A and remit the withheld funds within 20 days of the closing date. Missing that 20-day window can trigger IRS penalties even if the underlying withholding amount is correct.

Understanding the closing packet before you sit down at the title company helps you move through the FIRPTA paperwork without surprises. Your title officer will walk you through it, but knowing what you are signing makes the conversation faster.

If you are in contract on a Dallas home and just learned the seller is a foreign national, this is exactly the situation where having the right agent matters. I have navigated FIRPTA closings in Plano, Frisco, and the northern suburbs and can walk you through what to expect before you get to the closing table.

Connect with Paul at greysq.com/contact

How Dallas Title Companies Handle FIRPTA at Closing

In Texas, closing happens at a title company, not with an attorney or escrow company. That title company becomes the practical intermediary on FIRPTA withholding, and the major DFW players know this process well.

Here is what typically happens:

1. The title company identifies FIRPTA applicability early in the transaction, often at contract or during the title commitment phase.
2. The seller is asked to either provide a Non-Foreign Certification or to acknowledge that withholding will apply.
3. If withholding applies, the title company holds the withheld funds out of the seller's closing proceeds.
4. The title company files Form 8288 and Form 8288-A with the IRS on the buyer's behalf within the 20-day window.
5. The withheld funds are remitted directly to the IRS.

Your cost as the buyer is essentially zero for the mechanics. Title companies in DFW typically include FIRPTA handling as part of their standard closing fee. The financial impact falls on the seller, whose net proceeds are reduced by the withheld amount.

That said, FIRPTA can create transaction friction. A seller who was not expecting to lose 10% or 15% of their gross proceeds to withholding may push back on the closing timeline while they pursue a Withholding Certificate. Your agent needs to anticipate this during negotiation and contract drafting, and your closing timeline should account for potential IRS processing delays if a Form 8288-B is in play.

For more on what you will see in your closing packet, the Dallas buyer closing cost breakdown covers how FIRPTA withholding interacts with your other line items at settlement. And if you want to understand how Texas title insurance works alongside the FIRPTA process, the Texas title insurance guide for DFW buyers and sellers covers the state-regulated rates and who pays what at the DFW closing table.

Frequently Asked Questions

What happens if I do not withhold on a FIRPTA transaction in Texas?

If you purchase from a foreign seller without withholding the required amount, the IRS can hold you personally liable for the unpaid withholding, plus interest and penalties. The liability follows the buyer, not the seller. In practice, most Dallas title companies catch FIRPTA applicability before closing and will not let the transaction proceed without proper handling, but if a foreign seller provides a false Non-Foreign Certification and you rely on it in good faith, the rules become more complicated and you may want to consult a tax attorney.

Can the seller avoid FIRPTA withholding entirely?

Yes, in some cases. If the seller's actual tax liability on the transaction is less than the standard withholding rate would produce, they can apply to the IRS for a Withholding Certificate (Form 8288-B) before closing. If approved, the withholding is reduced to match their actual liability, sometimes to zero. The application process typically takes 60 to 90 days or more, so it has to be started well ahead of the closing date. Sellers who wait until they are under contract to begin this process often run into timeline conflicts that delay closing.

Does FIRPTA apply to all DFW home sales involving foreign sellers?

FIRPTA applies to any sale of U.S. real property by a foreign national, which includes residential homes, investment properties, and land. The only transactions where withholding does not apply are those where the seller provides a valid Non-Foreign Certification and the buyer has no actual knowledge that the certification is false, or where the purchase price is $300,000 or less and the buyer will use the property as a primary residence (full exemption from withholding, not just the 10% rate).

How common is FIRPTA in the Plano and Frisco markets?

More common than most buyers expect. The tech and corporate corridors in Plano, Richardson, and Frisco have attracted large communities of international professionals over the past decade, many of whom bought homes while working in the area and are now selling to return home or relocate. If you are buying in that corridor, your agent should be asking about FIRPTA status early in the transaction, not at the closing table. It is a standard due diligence question in those markets.

How do I find an agent in Plano or Frisco who knows how to handle FIRPTA closings?

Look for a broker with significant transaction volume in the northern suburbs and experience in relocation and corporate transfer sales, since those transactions have a higher baseline of international seller involvement. The agent should also have working relationships with title companies that have dedicated FIRPTA teams and should be raising the FIRPTA question during contract negotiation, not the week before closing. Paul Blair and the Grey Square team have navigated FIRPTA closings across Plano, Frisco, and the broader DFW market. Reach out at greysq.com/contact to talk through your transaction.

FIRPTA does not kill deals. It is a federal withholding requirement that title companies in Dallas process routinely, and in the vast majority of transactions it is handled cleanly with no drama. What it requires is awareness before you are sitting at the closing table with a pen in your hand.

If you are buying in Plano, Frisco, or anywhere in the northern DFW corridor and have questions about how FIRPTA might affect your closing, I am happy to walk you through it before you get there.

Schedule a conversation at greysq.com/contact

About Paul Blair

Paul Blair is the founder and broker of Grey Square, a virtual real estate brokerage representing buyers and sellers across Dallas and Los Angeles. With 22 years in the business and more than $200 million in closed transactions, Paul works the full range of the market, from luxury homes in the Park Cities and Preston Hollow to estates in the Hollywood Hills and across the Westside. Connect with Paul and the Grey Square team at greysq.com. TX TREC #9011505 · CA DRE #01792671.