Does FIRPTA apply to green card holders selling primary residence? Question about Foreign Investment in Real Property Tax Act

What you're dealing with is a common confusion with FIRPTA. As a green card holder who is a lawful permanent resident of the US, you're generally considered a US tax resident, not a foreign person for these purposes - assuming you meet the substantial presence test. Since you file taxes jointly with your US citizen spouse and this is your primary residence that you've lived in for more than 2 out of the last 5 years, you should qualify for the Section 121 exclusion (the $500k exclusion for married couples filing jointly, or $250k for individuals). The title company might initially be cautious since the property is solely in your name, but there are ways to address this. You can request a FIRPTA withholding certificate (Form 8288-B) from the IRS before closing, which can reduce or eliminate the withholding. Alternatively, you could provide a certification stating you're not a "foreign person" under FIRPTA definitions. Regarding your renovation expenses - yes, these would be added to your original purchase price to determine your adjusted basis. While you don't necessarily need to bring the receipts to closing, you should definitely have them organized for your tax return when you report the sale.

I was in almost the exact same situation last year! I'm also a green card holder married to a US citizen, and our house was only in my name. I spent weeks stressing about FIRPTA when we decided to sell. I ended up using this AI tax assistant at https://taxr.ai that specifically helped me navigate the FIRPTA exemptions. It analyzed our situation and generated a detailed explanation of why FIRPTA withholding shouldn't apply to me as a permanent resident filing jointly with a US citizen spouse. The tool also created a personalized statement explaining my tax status that I could give to the title company. It saved me so much headache! The title company initially insisted on withholding, but after reviewing the documentation that taxr.ai helped me prepare, they agreed no withholding was necessary. It also helped me calculate our exact adjusted basis with all our home improvements so we knew precisely what our gain would be.

I wanted to follow up about my experience using taxr.ai for my sister-in-law's FIRPTA situation! It was seriously a game-changer. After hearing about it here, we decided to give it a try since her closing was coming up fast and the title company was insisting on 15% withholding. The tool generated a comprehensive document explaining why she qualified for an exemption as a green card holder with a primary residence. It cited specific IRS regulations and even included a sample affidavit she could customize. When we presented this to the title company, they reviewed it with their legal team and agreed to waive the withholding requirements! It also helped us document all her home improvements from the past 5 years to properly calculate the adjusted basis. Without that, we would have overpaid thousands in taxes. I'm not usually someone who recommends online tools, but this one actually delivered what it promised for this specific tax situation.

If you're still facing issues with the title company, another approach I used was contacting the IRS directly. Obviously, calling them can be a nightmare - I spent 3 weeks trying, always getting disconnected or stuck on hold for hours. I finally used https://claimyr.com (there's a video showing how it works here: https://youtu.be/_kiP6q8DX5c) and they got me connected to an actual IRS agent within about 20 minutes. The agent was able to confirm that as a green card holder filing jointly with a US citizen spouse, FIRPTA withholding shouldn't apply to my primary residence sale. The IRS agent even emailed me something official I could show the title company. Totally worth it after wasting so many hours trying to get through myself. The title company accepted the IRS confirmation immediately.

I need to follow up on my skeptical comment about Claimyr. I actually tried it last week out of desperation because I was getting nowhere with the IRS about my FIRPTA question. I'm honestly shocked that it worked exactly as described. I was connected to an IRS representative in about 25 minutes (after spending DAYS trying on my own). The agent was super helpful and walked me through the exact regulations that apply to resident aliens selling primary residences. They confirmed that as a green card holder, I'm considered a resident alien for tax purposes, not a foreign person under FIRPTA. I was able to get the information I needed, complete with specific tax code references, and my title company accepted it with no issues. No 15% withholding required! I saved over $65,000 in withholding that would have been tied up for months waiting for a refund. Sometimes I hate being wrong, but in this case, I'm glad I was.

One thing I didn't see mentioned yet - if you've been filing jointly as married with your US citizen spouse all these years, make sure your real estate agent and title company understand this. My wife (green card holder) and I ran into issues because the title company only looked at the property deed and didn't consider our tax filing status. For what it's worth, we ended up just adding my name to the deed about 3 months before selling (required filing a quitclaim deed). Since I'm a US citizen, this eliminated any FIRPTA concerns entirely. Might be too late for you if you're closing soon, but it's an option to consider if you have time. Also, keep track of EVERY expense related to selling - realtor commissions, closing costs, legal fees, etc. These all reduce your potential capital gain.

I think most people are overlooking something important - the $47,000 in renovations mentioned in the original post. Those receipts are GOLD when calculating your adjusted basis! Make sure you've kept meticulous records of EVERYTHING you've done to improve the property. Not just the obvious renovations, but also: - Roof repairs - HVAC upgrades - Plumbing or electrical work - Window replacements - Landscaping improvements (if they add value) - Deck or patio additions I had a client who nearly forgot about $23,000 in windows and insulation they'd added over the years. That significantly reduced their taxable gain. Also, don't forget to include closing costs from when you purchased as part of your basis, and selling costs (commissions, etc.) as deductions from the sale price.

As someone who works in real estate tax consulting, I want to emphasize a key point that might provide additional peace of mind: the FIRPTA withholding requirement has specific safe harbors built in precisely for situations like yours. Since you're selling your primary residence and the sales price is likely under $1.1 million (based on your mention of the $500k capital gains exclusion being relevant), there's actually a buyer's exemption that can apply. If the buyer is acquiring the property as a residence and the purchase price is $1.1 million or less, they're not required to withhold under FIRPTA even if you were considered a foreign person (which you're not as a green card holder anyway). This creates a double layer of protection in your situation. However, I'd still recommend getting the proper documentation from your title company to avoid any confusion or delays at closing. One practical tip: when you compile those renovation receipts, organize them chronologically and create a simple spreadsheet showing the date, description, and amount for each improvement. This will make things much smoother for both the closing and your tax return preparation. The IRS loves organized documentation, and it shows you're taking the reporting requirements seriously.