Moving Back to India? FIRPTA and Selling Your US Home

Quick answer (updated October 2026): FIRPTA matters when selling a house after moving to India only if you're a "foreign person" (a nonresident alien) at the time of sale. Then the buyer generally withholds 15% of the price, or 10% or nothing if the buyer will live there and the price fits IRS limits. Selling as a US tax resident usually avoids it.

You've decided to move back, maybe for aging parents in Ahmedabad or a role in Bengaluru. The house in Plano or Fremont is the biggest thing left to sort out, and someone at a dinner party just mentioned "FIRPTA" in a tone that made it sound expensive.

FIRPTA is a withholding rule, not an extra tax. It can tie up a big chunk of your proceeds for months, but with planning many sellers avoid or shrink it. This guide covers who it hits, the rates and exceptions, how sale timing changes everything, and what to ask your CPA about Indian tax.

What FIRPTA is and who it applies to

The Foreign Investment in Real Property Tax Act requires a buyer to withhold tax when a foreign person sells US real estate. Per the IRS, for individuals, a foreign person means a nonresident alien. A US resident alien, which for tax purposes generally includes green card holders and visa holders who meet the substantial presence test, is not a foreign person.

FIRPTA doesn't care about your passport or visa type. It cares about your US tax residency on the date of sale. An H-1B holder who has lived here for years is typically a resident alien for tax purposes; the same person a year after moving to India may not be. The tax concept differs from mortgage terminology; see non-permanent resident vs non-resident alien.

Departure-year residency can be complicated; have a cross-border CPA confirm it.

FIRPTA withholding for NRI sellers: rates and exceptions

Situation (per IRS FIRPTA guidance, as of October 2026)	Withholding
Seller is a US person (resident alien or citizen) and gives a certification of non-foreign status	None
Foreign seller; amount realized $300,000 or less; buyer will use it as a residence	None
Foreign seller; amount realized over $300,000 up to $1,000,000; buyer will use it as a residence	10%
Foreign seller; all other sales (over $1,000,000, or buyer won't live there)	15%

"Buyer will use it as a residence" means the buyer plans to live there at least 50% of the days it's used during each of the first two 12-month periods after the sale. The buyer, not you, makes that call.

Who withholds: in most cases the buyer is the withholding agent, and closing agents typically handle it. The buyer must file Form 8288 and send the withheld amount to the IRS within 20 days of the transfer, and you receive Form 8288-A to claim credit for it.

Sell before or after leaving the US? A worked example

Say Rahul and Sneha, a hypothetical couple, are moving from Irving, Texas to Pune. They bought their home for $520,000 six years ago and expect to sell for $650,000.

	Sell before leaving (still US tax residents)	Sell after leaving (nonresident aliens), buyer will live there	Sell after leaving, investor buyer
FIRPTA withholding	$0 (certify non-foreign status)	$65,000 (10%)	$97,500 (15%)
Gain before selling costs	$130,000	$130,000	$130,000
Home sale exclusion	Up to $500,000 if they meet the 2-of-5-year ownership and use test and file jointly	Possible, if eligible; nonresident filers on Form 1040-NR are limited to $250,000 per IRS	Same as middle column
Cash tied up	None by FIRPTA	Until withholding certificate or tax return refund	Same

Hypothetical illustration; selling costs, depreciation and individual tax situations change the result. Not tax advice.

In the "after" columns, their actual US tax may be small or zero, yet $65,000 to $97,500 is held back at closing. They can recover the excess, just not on day one.

Practical takeaway: if you can list and close while you're still a US tax resident, FIRPTA usually becomes a non-event. If you also have a mortgage, see what happens to your mortgage if you leave the US for managing the loan while the sale is pending.

Talk to a loan officer who's seen this before: Planning a move to India in the next year? We'll run a free sale-timing and payoff review: your loan payoff, estimated net proceeds and the closing calendar that keeps you on the right side of your move date. Book a call or start a conversation.

Reducing FIRPTA withholding: Form 8288-B

If you must sell after leaving, you or the buyer can apply to the IRS for a withholding certificate using Form 8288-B. It can reduce or eliminate withholding when the actual tax owed will be lower, for example because your gain is small or you qualify for the home sale exclusion.

Key points from IRS guidance:

• The IRS normally acts on a complete application within 90 days.

• A seller living overseas can name the escrow or closing company to receive IRS correspondence.

Otherwise, the withheld amount is credited when you file a US nonresident return for the year of sale, and any excess is refunded.

Capital gains when moving to India: the US and India sides

US side

• Home sale exclusion: if you owned and lived in the home as your main home for at least two of the five years before the sale, you can generally exclude up to $250,000 of gain ($500,000 for joint filers), per IRS guidance. Nonresident filers face the $250,000 limit noted above.

• If you rented it out first: depreciation and non-use periods can change the math.

• Departure-year filing: you may have a dual-status year. Your CPA will sort out which return(s) apply.

India side

India's Income-tax Act, 2025 replaced the 1961 Act on April 1, 2026, so section numbers you see in older articles have changed. Whether India taxes your US home sale depends on your Indian residential status in the year of sale, and relief for US tax paid comes through the India-US tax treaty and foreign tax credit rules. Get this from a Chartered Accountant before you set your sale date. If you'll later move money the other way, selling property in India to buy in the US covers that trip.

Moving-back checklist for your US home

• Confirm your US tax residency status for the planned sale date with a CPA.

• Get a broker price opinion and estimated net sheet.

• Request a mortgage payoff statement and check for prepayment terms.

• If selling after departure, ask your title company early about FIRPTA procedures and Form 8288-B timing.

• Keep a US bank account open to receive proceeds and any IRS refund, and keep up foreign-account reporting while you're a US resident (see our FBAR and FATCA guide).

• If you're considering renting instead, weigh it against the tax and management trade-offs; see laid off on an H-1B with a mortgage for the keep-rent-sell comparison.

What the rules actually say

• IRS FIRPTA withholding guidance and Instructions for Form 8288 (Rev. January 2026): withholding generally 15% of amount realized; none for residences at $300,000 or less where the buyer will occupy; reduced 10% for buyer-occupied residences over $300,000 up to $1,000,000.

• IRS Form 8288 instructions: buyer files Form 8288 and pays withholding by the 20th day after transfer; no withholding if the seller provides a certification of non-foreign status (a valid Form W-9 qualifies).

• IRS Form 8288-B guidance: buyer or seller may apply for a withholding certificate; IRS normally acts within 90 days of a complete application.

• IRS Publication 523: exclusion of up to $250,000 ($500,000 joint) of gain on a main home meeting the 2-of-5-year ownership and use test.

Frequently Asked Questions

Q: Does FIRPTA apply to H-1B or green card holders selling a home?
A: Generally not while you're a US tax resident. FIRPTA applies to foreign persons, which for individuals means nonresident aliens. Most long-term H-1B workers and green card holders are resident aliens for tax purposes and can certify non-foreign status. Confirm your status for the sale year with a CPA.

Q: How much is FIRPTA withholding if I sell after moving to India?
A: Usually 15% of the sale price. If the buyer will live in the home, withholding is 10% for prices over $300,000 up to $1,000,000, and none at $300,000 or less, per IRS guidance as of October 2026. A Form 8288-B withholding certificate can reduce it.

Q: Is FIRPTA withholding my final tax?
A: No. It's a prepayment. You file a US nonresident return for the year of sale, report the actual gain, and claim credit for the amount withheld on Form 8288-A. If withholding exceeded your tax, the IRS refunds the difference after processing.

Q: Can I sell my US house from India?
A: Yes. Many sellers close remotely with a power of attorney or mobile notary arrangements, depending on the title company and state. Expect FIRPTA withholding if you're a nonresident at the time. Line up a US bank account for proceeds and a local agent you trust.

Q: Do I pay tax in India on my US home sale?
A: It depends on your Indian residential status in the year of sale under the Income-tax Act, 2025, and on treaty and foreign tax credit rules. Selling while still a US resident can simplify both sides. Have a Chartered Accountant and a US CPA coordinate before you list.

Plan your sale date before you plan your flight

The order of events matters: sell as a US tax resident and FIRPTA often disappears; sell after you leave and a large share of your proceeds can sit with the IRS for months. In a free sale-timing and payoff review, we pull your payoff, estimate net proceeds, and map a closing calendar against your move date so you walk into your CPA meeting with numbers. We work with families relocating to India regularly and are licensed nationwide. Have your mortgage statement, purchase closing statement and target move date ready. Book a free 15-minute call at /contact, start your application at /apply, or call 713-366-4668.

Masala Loans is a brand of Matador Lending, LLC (NMLS #2072896). Written by Apurva Sanghavi, President, NMLS #227127. Equal Housing Opportunity. This article is general education, not tax, legal or immigration advice — consult a qualified CPA, attorney or immigration lawyer for your situation. Program availability, rates and terms vary by lender and borrower and are subject to change; not a commitment to lend.