Common FIRPTA Mistakes to Avoid
The FIRPTA process is straightforward if you know the steps — but there are several mistakes that consistently delay refunds by months or cause sellers to leave money on the table entirely. Here are the ones we see most often at DVC Sales.
1. Not Filing a Tax Return at All
Every year, international DVC sellers accept the 15% withholding as a final cost and never file a Form 1040-NR. On a $25,000 sale with a $5,000 gain, that means leaving roughly $2,250 in excess withholding with the IRS permanently. The refund does not come automatically. You have to file to claim it.
2. Missing the 3-Year Deadline
The IRS gives you three years from the original tax return due date to file and claim a refund. Miss that window and the refund is gone. If you sold a DVC contract and never filed, check whether you are still within the three-year window before giving up.
3. Sending an Uncertified Photocopy of Your Passport
The most common cause of rejected ITIN applications. A regular photocopy is not a certified copy. The IRS requires the original passport, a copy certified by the issuing authority or a US embassy, or verification through a Certifying Acceptance Agent (CAA). A home-printer copy goes straight to the rejection pile.
4. Not Having Your Original Purchase Documents
Your cost basis determines your gain and your tax. Without proof of what you paid, the IRS could treat the entire sale price as gain. Before you sell, locate your original closing statement from the DVC purchase. If you cannot find it, contact the broker or title company that handled the original transaction.
5. Filing Too Late in the Year
You can file your 1040-NR as soon as January 1 of the year following your sale. Sellers who wait until April are at the back of the processing queue. Filing in January can shave months off your wait for the refund.
6. Applying for a New ITIN When You Already Have One
If you previously filed a US tax return for any reason, you may already have an ITIN. Check your records before applying for a new one. Duplicate applications cause delays and confusion at the IRS.
7. Using the Wrong IRS Address
The ITIN unit in Austin, Texas has a specific mailing address different from regular IRS processing centers. Sending your W-7 and 1040-NR to a general IRS address adds weeks to processing time. Always use the address printed in the Form W-7 instructions.
