ITIN for Foreign Buyers, Landlords and Sellers of US Property: Rent, FIRPTA Withholding, Withholding Certificates and Refunds

Buying a flat in Miami, a holiday home in Orlando or a rental house in Texas is straightforward for a foreigner. You do not need a visa, a US address or a Social Security Number to own US property. What surprises many buyers is what happens afterwards: the first rent cheque arrives with 30% missing, or a sale closes and the buyer's closing agent sends 15% of the price to the IRS.

At both of those moments, and at a few others in between, a non-resident individual needs a US taxpayer number. For someone who cannot get a Social Security Number, that number is an ITIN, an Individual Taxpayer Identification Number. Without it, you cannot claim back over-withheld tax, cannot choose the cheaper way of being taxed on rent, and may wait months longer for money that is yours.

This guide explains when owners of US property need an ITIN, how the ITIN fits with the rental and FIRPTA rules, and how to time the application so it does not delay a sale or a refund.

Short answer: a non-resident who earns US rent usually needs an ITIN to elect to be taxed on net rent rather than 30% of gross rent, because the form given to the tenant or manager is only valid with a US taxpayer number and the election is made on a yearly US return. A non-resident who sells US property usually has 15% of the price withheld under FIRPTA, and needs an ITIN to receive the IRS-stamped withholding statement, to apply for reduced withholding before closing, and to claim the excess back on a return. The IRS will not issue an ITIN for a sale before there is a binding sales contract, so the timing has to be planned.

Who this guide is for

It is written for individuals who live outside the USA and:

• own, or are about to buy, US property in their own name or through a US LLC that is disregarded for tax (a single-member LLC),
• rent it out, or plan to,
• or are selling it.

If your property is held by a US corporation, a partnership with other investors or a foreign company, the corporation, partnership or company is the taxpayer for most purposes, and the analysis changes. We mention those structures where it matters. For choosing the structure before you buy, read US real estate through an LLC for foreign investors first.

Why property brings non-residents into the US tax system

Most non-residents with a US company never have to file a personal US return, because their business income is not effectively connected with the USA. Property is different. US real estate is, by definition, in the USA. Rent from it is US-source income, and gain from selling it is taxed by the USA whatever the owner's residence, under a law called the Foreign Investment in Real Property Tax Act (FIRPTA).

Both are collected first by withholding, deducted by someone else before the money reaches you:

• Rent: the tenant or property manager withholds 30% of the gross rent, unless you give them the right form.
• Sale: the buyer withholds 15% of the sale price at closing, unless an exception or an IRS certificate applies.

Withholding is a down payment on tax, not the final tax. Getting the difference back, or never paying it in the first place, requires dealing with the IRS in your own name, and that is where the ITIN comes in. See what an ITIN is and who needs one.

Renting out US property

The default: 30% of gross rent

By default, rent paid to a non-resident is treated as passive income and taxed at 30% of the gross amount, or a lower treaty rate where a treaty covers it. Nothing is deducted first: not mortgage interest, property tax, insurance, repairs, management fees or depreciation. The tenant or the property manager acting as withholding agent deducts the 30% and pays it to the IRS.

On a typical leveraged rental, 30% of gross rent can be more than the property's entire cash profit.

The alternative: elect to be taxed on net rent

US law lets a non-resident who owns US property held to produce income elect to treat the rent as effectively connected income. With the election:

• tax is calculated on net rental income, after mortgage interest, property tax, insurance, repairs, management fees and depreciation,
• normal graduated rates apply,
• the owner files a Form 1040-NR for the year of the election and every year after, and
• the 30% withholding stops once the tenant or manager has a valid Form W-8ECI from the owner.

The election covers all of the owner's US real property income, not just one property, and it continues for later years unless it is revoked, which needs IRS consent. It is made with a statement attached to the return, listing the properties and how they are held. See effectively connected income explained.

Where the ITIN comes in

Two separate points make the ITIN unavoidable for a landlord who wants the election:

1. Form W-8ECI needs a US taxpayer number. The form's own instructions say it is not valid without one. Until the tenant or manager holds a valid W-8ECI, they must keep withholding 30% of gross rent.
2. The election is made on a return. A non-resident individual files Form 1040-NR, which needs an SSN or ITIN.

In practice, most landlords apply for the ITIN with their first 1040-NR, the return that reports the first year of rent, makes the election and claims back any 30% withheld during that year. The ITIN is then on the next W-8ECI, and the 30% stops.

Do not wait too long to file

A rule that catches non-resident landlords: deductions are only allowed if the return is filed on time. For a non-resident, the IRS disallows deductions and certain credits if the return is not filed within 16 months of its original due date, unless the IRS waives the rule. A landlord who ignores filing for several years can find that, when the returns are finally filed, they are taxed on gross rent after all. Starting the ITIN and the first return promptly is how you protect the deductions.

Through a single-member LLC

Many owners hold their rental through a single-member LLC. For tax purposes, a single-member LLC owned by a non-resident individual is disregarded: you are still the person earning the rent. That means:

• the LLC files its own Form 5472 with a pro forma 1120 every year, as every foreign-owned single-member LLC does, using the LLC's EIN,
• you file the 1040-NR reporting the rent and making the election, using your ITIN,
• the W-8ECI is given in your name, as the owner of the disregarded LLC.

So an LLC does not remove the need for your personal ITIN. It adds liability protection and a clean bank account for the rent. See Form 5472 explained.

Through other structures

If the property is held by a US corporation, the corporation pays tax on its own net income at 21% using its EIN, and you need an ITIN only if a personal filing arises, for example a treaty claim on dividends. If it is held by a partnership of several investors, the partnership has its own filing and withholding duties for foreign partners, and each partner typically needs an ITIN. See single-member vs multi-member LLCs and the 21% corporate tax explained.

Selling US property: FIRPTA

What the buyer must withhold

When a foreign person sells US real property, the buyer generally must withhold 15% of the amount realized, essentially the sale price, and pay it to the IRS. The withholding is on the price, not the profit. The buyer files the withholding return and pays the tax by the 20th day after the transfer, usually through the closing agent.

There are reduced rates where the buyer is an individual who will live in the home:

"Residence" has a specific meaning: the buyer or a family member must have definite plans to live in the property for at least half the days it is used in each of the first two years. These thresholds have been in place since 2016 and have not been indexed for inflation.

If your property is held through a single-member LLC that is disregarded, you are treated as the seller, so FIRPTA applies just as if you held it personally.

Why 15% of the price is usually too much

Your actual US tax is calculated on the gain, the sale price less what you paid, the cost of improvements and selling costs, and after recapturing depreciation you claimed. For most sellers, 15% of the price is far more than the tax.

An illustration: a flat bought for $420,000 is sold for $500,000. Withholding at 15% is $75,000. The gain, after selling costs, might be around $50,000, on which the tax is a fraction of that. Tens of thousands of dollars are owed back to the seller, but only after the seller files a US return claiming them.

The stamped statement, and why it needs your ITIN

When the buyer reports the withholding, it gives the IRS a statement for each foreign seller. The IRS stamps a copy and sends it to the seller, and that stamped copy is what you attach to your return to claim credit for the tax withheld.

If the statement does not show your taxpayer number, the IRS does not send you the stamped copy. It writes to you asking for the number first. A seller who reaches closing without an ITIN starts the refund process already behind.

Option 1: apply for a withholding certificate before closing

Either party can ask the IRS, before or at closing, for a withholding certificate that reduces the withholding to the amount of tax actually expected, or eliminates it, for example where the calculation shows the seller's maximum tax is lower than 15% of the price, or where a treaty or non-recognition rule applies.

Three points matter for an owner abroad:

• The application needs a taxpayer number, and if you do not have an ITIN yet, the ITIN application goes in together with the withholding certificate application. The IRS processes the ITIN part first so the certificate can be dealt with.
• The IRS normally acts on a certificate within 90 days of having all the information it needs.
• The buyer still withholds at closing, but if the application was submitted by then, the buyer (usually the closing agent) can hold the money and need not pay it to the IRS until 20 days after the IRS issues the certificate or a refusal. The approved amount goes to the IRS and the rest comes back to you. This is the main practical benefit: the excess never reaches the IRS.

Withholding certificate applications are specialist work that depends on the sale figures, your basis and depreciation history. We coordinate the ITIN side with your closing agent and a US tax adviser who prepares the certificate application, or refer you to one; ask us.

Option 2: claim the excess back on your return

If no certificate is sought, the full withholding goes to the IRS, and you claim the excess back by filing a Form 1040-NR for the year of the sale, reporting the gain and attaching the stamped withholding statement. The ITIN application can go in with that return.

This route is simpler but slower. A sale in 2026 is reported on the 2026 return, which cannot be filed before 2027, and the refund follows processing of the return and the ITIN. Expect the money to be away for many months. Budget for it, particularly if you are buying another property with the proceeds.

The ITIN exception for property sales

The general rule is that an ITIN is issued only with a tax return. Sales of US property are one of the recognised exceptions: an ITIN can be issued without a return when a disposition of US real property by a foreign person is subject to withholding. The evidence is specific:

• for the seller, a copy of the sales contract, settlement statement or closing disclosure, together with the buyer's withholding returns or a withholding certificate application,
• for a buyer or other party who needs a number, the withholding forms and the sales contract or closing documents.

There is a timing catch. The IRS says it will deny an ITIN application filed before the seller has a legally binding contract to sell, unless there is another valid reason for the number. You cannot "get an ITIN ready" years ahead of a sale for that reason alone. If you already have a rental and file returns, you will usually have an ITIN by then anyway. See ITIN without a tax return: the exceptions.

Does the buyer need an ITIN?

A US buyer has an SSN and does not. A foreign buyer usually does not need an ITIN simply to buy, take a mortgage or register the deed. A foreign buyer starts to need one when they rent the property out and want the net election, or when they later sell. Some lenders ask for an ITIN for foreign-national mortgages; that is a lender requirement, not a tax purpose, and on its own it is not a basis the IRS accepts.

State taxes

Some states have their own withholding on sales by non-residents, and states with an income tax tax the rent and gain from property there. These are state matters outside our services; your closing agent and a local tax adviser will tell you what applies. See state taxes for foreign-owned LLCs.

Timelines that work

Processing of an ITIN application, once submitted, typically takes about seven weeks, and nine to eleven weeks in the busy season or for applications from abroad. Once issued, keep it alive: an ITIN that is not used on a federal return for three consecutive years expires at the end of the third year. A landlord filing every year keeps it current automatically; a seller who files once and then stops will need to renew if a later return is required.

Common mistakes

1. Closing a sale before the ITIN is in place, so the stamped statement is held back and the refund starts late.
2. Applying for an ITIN years before a sale, without a contract, and having it denied.
3. Letting the manager withhold 30% of gross rent for years because no W-8ECI with a taxpayer number was ever given.
4. Filing years late and losing the deductions under the 16-month rule.
5. Assuming the LLC's EIN covers the owner. For a disregarded LLC, the owner still files personally with an ITIN.
6. Forgetting the LLC's own Form 5472, which is due every year whether or not the property makes a profit, with a $25,000 penalty for missing it.
7. Using a bank's or lender's request as the reason for an ITIN, which is not a tax purpose on its own.
8. Not budgeting for FIRPTA when the sale proceeds are needed quickly for another purchase.

Worked examples

These are illustrative examples, not client cases.

Example 1: the Orlando holiday rental. A family in Mumbai buys a house in Florida through a Florida LLC and rents it out through a manager, who withholds 30% of the gross rent in the first year. After the year ends, the owner files a 1040-NR making the net election, with the ITIN application attached; depreciation and interest leave a small taxable profit, and most of the withholding is refunded. The ITIN goes on a new W-8ECI, and the 30% withholding stops. The LLC files its Form 5472 separately.

Example 2: the London owner selling a Miami flat. A UK resident who has never filed a US return signs a contract to sell a flat for $650,000 to an investor. The buyer must withhold 15%, $97,500. Her expected tax on the gain is much lower. As soon as the contract is signed, a withholding certificate application goes in with her ITIN application, the closing agent holds the withholding at closing, and only the approved amount is sent to the IRS.

Example 3: the sale that has already closed. A Dubai resident sold a Texas house in 2026 without any planning; 15% was withheld. He needs an ITIN to receive the stamped statement and to file. Route: the ITIN under the sale exception with the closing documents and withholding forms, or with his 2026 1040-NR in early 2027, claiming the excess.

Example 4: a Nigerian buyer with no rental plans. A buyer in Abuja purchases a flat for family visits, not to rent out. She does not need an ITIN to buy. She will need one later if she rents it out, or when she sells.

What we need from you

To tell you which route fits, we need: how the property is held (personally, a single-member LLC, a partnership or a corporation), whether it is rented and since when, any withholding statements from the manager, the sale contract and closing statement if you are selling, and your passport. From that, we can usually say in one conversation whether to apply now, with which document, and what else needs to happen.

How UCB helps

Our ITIN application service costs $249. We check that you have a valid basis, prepare the application, arrange certification of your passport so the original usually stays with you, and follow up until the ITIN arrives. Where the ITIN must go with a tax document, such as a 1040-NR or a withholding certificate application, ask us: we can file the ITIN together with it, and we coordinate the parts we do not prepare ourselves, such as the withholding certificate application and the personal return, with your closing agent and a US tax adviser. If you are holding property through a company, we form the LLC in the property's state, for example $299 all-in in Florida, obtain its EIN, apply for its US bank account, and file its yearly federal return through our US tax filing service ($300). Purchase contracts, estate planning and state tax returns are for your attorney and local adviser; we will tell you when you need one.

Buying, renting out or selling US property from abroad? WhatsApp us at +91 8105 199 399 or email enquiries@ucbsolutions.com with how the property is held and your timeline, and we will tell you when to apply for your ITIN so it does not hold up your rent or your sale proceeds.