Understanding FIRPTA: A Complete Guide for DVC Sellers

FIRPTA stands for the Foreign Investment in Real Property Tax Act. If you are a non-US person selling a DVC timeshare contract, FIRPTA requires the closing agent to withhold 15% of the gross sale price and send it to the IRS. This guide explains what that means for you and what happens next.

Why FIRPTA Applies to DVC

DVC contracts are deeded real property interests in the United States. Even though you are selling vacation points rather than a house, the IRS treats DVC contracts as US real property interests subject to FIRPTA. Your nationality or country of residence does not change this classification.

How the Withholding Works

When your sale closes, the title company calculates 15% of the sale price and deducts it from your proceeds. That money goes directly to the IRS, not to the buyer. The closing agent files Form 8288 within 20 days of closing and sends a copy of Form 8288-A to you — your receipt for the withholding.

Withholding Is Not Your Final Tax

The 15% is withheld on your gross sale price. Your actual tax is calculated on your gain — the difference between what you sold for and what you originally paid. Because the gain is always less than the sale price, the withholding almost always overshoots your real tax. Most sellers get a significant refund by filing Form 1040-NR after the tax year ends.

Getting Your Refund

After December 31 of the year your sale closes, file Form 1040-NR to report the sale, calculate your actual tax, and claim a refund of the excess withholding. If you do not have a US tax identification number, apply for an ITIN using Form W-7 attached to your return. The IRS typically takes 4 to 6 months to process non-resident returns. Use our tax estimator to preview your numbers before you start.

For a deeper dive into every step of the process, see our complete FIRPTA guide.