FIRPTA Withholding Rates Explained: 15% vs 10% — Which Applies to You?
There are three possible FIRPTA withholding rates: 15%, 10%, and 0%. Which one applies to your DVC sale depends on the sale price, the buyer's intended use, and whether you can get an IRS withholding certificate. Understanding the rates helps you calculate your expected withholding and refund before you close.
The Standard Rate: 15%
The standard FIRPTA withholding rate is 15% of the gross sale price. This rate has applied to most real property transactions since February 17, 2016, when the IRS raised it from the original 10%. It applies automatically to any sale that does not qualify for the lower 10% rate or a reduced withholding certificate.
The 15% is calculated on the gross sale price (the full amount the buyer pays) before any deductions for commission, closing costs, or outstanding maintenance fees. For a $25,000 DVC contract: $25,000 x 15% = $3,750 withheld.
The 10% Rate: Personal Residence Exception
A reduced 10% withholding rate applies when both of the following conditions are met:
- The sale price is $1,000,000 or less
- The buyer signs a written statement certifying they intend to use the property as a personal residence under Section 121 standards
For DVC specifically: the sale price almost always falls under $1,000,000, so condition 1 is met. The problem is condition 2. DVC is a vacation timeshare (buyers purchase DVC to use points at Disney resorts for leisure travel, not to establish a primary home. No responsible buyer would certify that they intend to use Saratoga Springs or the Grand Californian as their principal residence. Most reputable DVC closing agents apply the standard 15% rate because the residence exception does not apply to vacation property.
The $300,000 Exception: Zero Withholding
A separate provision allows zero FIRPTA withholding when the sale price is $300,000 or less AND the buyer certifies intent to use the property as a personal residence. This "residence exception" has the same problem: DVC is not a primary residence, so this provision is essentially unavailable for DVC timeshare sales under any typical circumstances.
The Zero Rate via Form 8288-B
A different path to zero (or reduced) withholding is available regardless of sale price: filing Form 8288-B before closing to request a withholding certificate from the IRS. The IRS calculates your estimated actual tax and issues a certificate for that amount) which could be zero (if you are selling at a loss or have zero gain) or a reduced percentage.
This is the only realistic path to reduced or zero withholding for most DVC sellers. See our Form 8288-B guide for how to apply.
Rate History
| Period | Standard Rate | Notes |
|---|---|---|
| Before Feb 17, 2016 | 10% | Original FIRPTA rate |
| Feb 17, 2016 – present | 15% | PATH Act 2015 increased standard rate |
| Personal residence exception (any date) | 10% | Sale price under $1M, buyer certifies primary residence |
| Low-value residence exception (any date) | 0% | Sale price under $300K, buyer certifies primary residence |
State Withholding: What FIRPTA Does Not Cover
FIRPTA is a federal withholding requirement. Several US states have their own real estate withholding for non-resident sellers:
- Hawaii (HARPTA): 7.25% state withholding applies to all non-Hawaii-resident sellers. Aulani DVC sellers face both (22.25% combined. See our HARPTA guide.
- California: 3.33% state withholding may apply to non-California-resident sellers, but most DVC properties are not in California.
- Florida: No state income tax, so no state withholding on Florida DVC sales.
Worked Examples
| Sale Price | Rate | Withheld | Example Gain | Actual Tax | Refund |
|---|---|---|---|---|---|
| $15,000 | 15% | $2,250 | $2,000 | $300 | $1,950 |
| $25,000 | 15% | $3,750 | $6,000 | $900 | $2,850 |
| $40,000 | 15% | $6,000 | $12,000 | $1,800 | $4,200 |
| $20,000 | 15% | $3,000 | Loss) $0 gain | $0 | $3,000 |
Frequently Asked Questions
What is the FIRPTA withholding rate in 2026?
The standard rate is 15% of the gross sale price. This has not changed since February 2016 when the PATH Act raised it from 10%.
Does the 10% rate apply to DVC sales?
Rarely. The 10% rate requires the buyer to certify intent to use the property as a primary residence. DVC is vacation property (almost no DVC buyer can honestly make that certification for a timeshare.
Is there any way to avoid the 15% withholding?
Yes) file Form 8288-B before closing to request a reduced withholding certificate from the IRS based on your estimated actual tax. If you are selling at a loss, you can request zero withholding. The IRS takes about 90 days to process the application.
Does the 15% rate apply to the sale price or the gain?
The withholding is 15% of the gross sale price. Your actual tax is calculated on your capital gain (sale price minus your cost basis). These are different numbers. The difference between what was withheld and what you owe is your refund.