Selling as a Non-Resident: NYS Withholding and FIRPTA Basics
If you don't live in New York State, selling a NYC apartment comes with an extra step: money withheld at closing and remitted to the tax authorities before you see your proceeds. It isn't an additional tax — it's a prepayment against tax you may owe — but it can tie up substantial cash for months, and it surprises sellers who didn't plan for it.
Two separate regimes apply, and a foreign seller can face both.
1. New York State nonresident withholding (Form IT-2663)
Who: individuals, trusts, and estates who are not New York State residents selling real property (or co-op shares) located in New York. This includes Americans living in New Jersey, Connecticut, Florida, or anywhere else — not just foreign nationals.
What: an estimated personal income tax payment on the gain, computed on Form IT-2663 and paid at or before recording. The rate applied is the highest New York State personal income tax rate in effect for the year.
Key point: it's calculated on the gain, not the sale price — so your basis and selling costs matter enormously. Complete the form carefully with your CPA; sloppy preparation means overpaying and waiting for a refund.
Exemptions: the most common is where the property qualified as the seller's principal residence under IRC §121 (the $250K/$500K exclusion) — certify this on the form. Other exemptions exist for certain transfers; confirm with your CPA.
Reconciliation: you file a New York nonresident return (IT-203) for the year and either owe more or get a refund.
NYC note: NYC personal income tax applies to city residents. A nonresident isn't subject to NYC income tax on the gain, but is subject to the state regime above — and to the NYC transfer tax (1%/1.425%), which every seller pays regardless of residence.
2. FIRPTA (foreign persons)
Who: sellers who are foreign persons for U.S. tax purposes — nonresident aliens, foreign corporations, and certain foreign entities.
What: under IRC §1445, the buyer is legally required to withhold and remit generally 15% of the gross amount realized (the sale price — not the gain). The buyer is the withholding agent and bears liability for failure to withhold, which is why buyers' attorneys take this seriously.
Reduced rates and exemptions:
Exempt if the price is $300,000 or less and the buyer acquires it as a residence with the required intent to use it as such
10% where the price is over $300,000 but not more than $1,000,000 and the buyer will use it as a residence
15% otherwise
Withholding certificate (Form 8288-B): if the actual tax on your gain will be less than the withholding — very common, since 15% of price often far exceeds tax on gain — you can apply to the IRS for a reduced-withholding certificate. Apply before or at closing; processing takes months, and the funds are typically held in escrow meanwhile. Starting this early is the single most valuable thing a foreign seller can do.
Reconciliation: file a U.S. return (Form 1040-NR or corporate equivalent) for the year to compute actual tax and claim any refund.
Stacking, and what it looks like in practice
A foreign seller of a $2,000,000 NYC condo could face:
FIRPTA withholding: $300,000 (15% of price)
NYS IT-2663 estimated tax on the gain
Plus normal seller closing costs: commission, NYC RPT ($28,500 at 1.425%), NYS RETT ($8,000 at 0.4%), attorney, flip tax if any
Proceeds at closing can be far lower than a seller expects. If you're using the proceeds to buy something else — here or abroad — model this carefully before committing to a purchase timeline.
Planning checklist
Engage a CPA experienced in cross-border or multi-state real estate before you list.
Gather basis documentation: original closing statement, mansion tax paid, renovation invoices, capital assessments. Basis drives the IT-2663 number and your real tax.
For foreign sellers: file Form 8288-B early if withholding will exceed actual tax.
Get an ITIN if you don't have one — you can't file (or get refunds) without a taxpayer identification number.
Coordinate attorneys. Your attorney and the buyer's attorney must agree on withholding mechanics and escrow well before closing, not on the day.
Plan for the timeline. Refunds arrive after filing season, and 8288-B processing takes months. Assume the cash is unavailable for a while.
This article is for general informational purposes only and does not constitute tax or legal advice. Withholding rules are technical and fact-specific. Consult a qualified CPA and attorney. Sources: IRC §1445 (FIRPTA); IRS Forms 8288/8288-B; NYS Tax Law §663 and Form IT-2663. As of August 2026.
Want to stay up to date on NYC real estate?
Follow @tonyinjeyeo on Instagram for more market insights, tips, and updates.
Buying, selling, renting, or exploring NYC real estate?
Yeo Real Estate assists with all aspects of NYC real estate, from residential and commercial transactions to market guidance and property searches.Schedule a consultation:
📧 hello@yeonyc.com
📞 +1 646-940-0166Yeo Real Estate
135 W 50th St, Suite 200
New York, NY 10020
REBNY Member