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FIRPTA for Korean Sellers: Selling Your US Property

Korean sellers of US property, particularly at the Beverly Hills and Irvine price tiers where Korean buyers have concentrated since the 1990s, face significant FIRPTA withholding at closing. On a $2 million Beverly Hills sale, 15% withholding is $300,000. If the actual capital gains tax on the appreciated asset is $80,000–$100,000, the 8288-B certificate filed at listing recovers $200,000+ at closing. At this price tier, the certificate is not optional.

FIRPTA at the Korean Buyer’s Price Tier

Korean HNWI properties in Beverly Hills and Irvine often carry substantial appreciation: properties purchased for $2–5 million in the 1990s–2000s are now worth $10–20 million in some cases. FIRPTA on a $10 million sale: $1,500,000 withheld at closing. Actual tax at 20% (HNWI long-term capital gains rate) on a $5M gain: $1,000,000. 8288-B recovers $500,000 at closing rather than after the annual return. File the certificate the day the property is listed. Full guide: FIRPTA complete guide.

Korean Capital Gains and the DTA

Korean tax residents who sell US property must declare the gain in Korea: (1) Korean capital gains tax: Korea levies capital gains tax on worldwide assets for Korean tax residents. (2) US-Korea DTA credit: US capital gains tax paid is credited against the Korean tax on the same gain. If the US rate meets or exceeds the Korean rate, Korean tax after credit may be zero. (3) Korean reporting deadline: the gain is declared on the Korean annual income tax return (Jonghap Sodeuk Sinsogoseo year-end filing). (4) KRW/USD at sale date: the USD gain is converted to KRW at the date-of-sale exchange rate for the Korean calculation.

Korean Estate Tax on US Property

South Korea has its own estate tax that applies to Korean residents who inherit US property: (1) Korean inheritance tax: applies to assets transferred on death for Korean tax residents, including overseas assets. (2) No Korea-US estate tax treaty: the absence of a treaty means both the US estate tax (at the $60K non-citizen level) and Korean inheritance tax may apply to the same inherited US property. (3) Foreign corporation solution: holding US property through a properly structured foreign corporation addresses the US estate tax exposure. Korean inheritance tax treatment of the corporation requires a Korean tax specialist.

Guides: US Mortgage for Koreans — FIRPTA Guide — Find an Agent

Frequently Asked Questions

What is FIRPTA for Korean sellers of US property?

15% withheld from gross sale price at closing. Form 8288-B filed at listing reduces this to actual capital gains tax. At Beverly Hills and Irvine prices, the certificate saves hundreds of thousands at closing.

Does South Korea also tax the gain when a Korean sells US property?

Yes, if the seller is a Korean tax resident. US capital gains tax paid is credited against Korean tax through the US-Korea DTA.

Does South Korea have a US estate tax treaty?

No. Korean owners of US property face the bare $60,000 non-citizen exemption. Foreign corporation ownership is strongly recommended at the HNWI price tier.