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FIRPTA for German Sellers: Selling Your US Property

When a German citizen sells US property, two things surprise almost every seller. First: FIRPTA withholds 15% of the full sale price at closing, not 15% of the profit. Second: Germany’s Spekulationsfrist — the 10-year rule that exempts German-held German property from German CGT — does not apply to US property. The US taxes the gain regardless of how long the property was held. The Form 8288-B withholding certificate and the Germany-US DTA are the tools that together minimize the combined tax burden.

FIRPTA: The 15% Gross Price Withholding

Standard FIRPTA rules: 15% of the gross sale price withheld by the buyer at closing. Example: A German citizen sells a Naples condo for $550,000 purchased for $350,000. Gain: $200,000. FIRPTA withholds 15% of $550,000 = $82,500. Actual US capital gains tax at 15% on $200,000 gain: $30,000. Form 8288-B certificate: reduces withholding to $30,000 at closing, releasing $52,500. Without certificate: $82,500 escrowed, $52,500 refunded via Form 1040-NR after the tax year. File the certificate at listing. Full guide: FIRPTA complete guide.

The Spekulationsfrist Misconception

German tax law exempts capital gains on German property held more than 10 years from German income tax under the Spekulationsfrist ({fix(chr(167))}23 EStG). Many German owners of US property assume this rule also applies to their US property. It does not. (1) US tax: the US taxes capital gains on US property regardless of how long it was held. There is no 10-year exemption under US tax law for non-resident sellers. FIRPTA applies regardless. (2) German tax: German tax residents who sell US property must report the gain on their German tax return. For German-sited property, the 10-year Spekulationsfrist applies. For foreign property (including US), different rules apply — consult a German Steuerberater (tax adviser) with international tax experience.

The Germany-US DTA and Double Taxation

The Germany-US Double Taxation Agreement coordinates taxation of the same gain: (1) US taxes first: US capital gains tax is paid on the US sale. (2) German Anrechnungsverfahren: US tax paid is credited against German tax liability on the same income. This reduces or eliminates German tax on the same gain. (3) Practical effect: if the US rate equals or exceeds the German rate on the same gain, German tax after credit may be zero. If Germany’s effective rate is higher, you pay the difference. (4) EUR/USD effect on the German calculation: the gain is reported in EUR on the German return. EUR/USD movements affect the EUR gain amount, sometimes producing a different tax outcome than the USD calculation.

Guides: US Mortgage — FIRPTA Guide — Find an Agent

Frequently Asked Questions

Does Germany's 10-year Spekulationsfrist apply to US property?

No. The Spekulationsfrist exempts gains on German-sited property held 10+ years. It does not apply to US property. FIRPTA withholding applies to German sellers of US property regardless of how long they owned it.

What is FIRPTA for German sellers?

15% withholding on the gross US sale price at closing. Form 8288-B certificate filed at listing reduces this to the actual tax owed on the gain.

Does Germany have a double taxation treaty with the USA for property sales?

Yes. The Germany-US DTA coordinates taxation. US tax paid is credited against German tax (Anrechnungsverfahren). If the US rate equals or exceeds the German rate, German tax after credit may be zero.

Must German sellers file a US tax return when selling US property?

Yes. Form 1040-NR reports the US property sale and claims the FIRPTA withholding credit. The German tax return also reports the same gain. Work with both a US CPA and a German Steuerberater.