Selling in Gramercy Park can feel straightforward until FIRPTA shows up at the closing table. If you or your buyer are dealing with cross-border details, the federal withholding rules can impact cash at closing and timing in a big way. You want a clear path, fewer surprises, and a smooth Manhattan closing. This guide breaks down what FIRPTA means for your sale, the timelines that matter, and how New York State and City rules fit in. Let’s dive in.

What FIRPTA means for your sale

The Foreign Investment in Real Property Tax Act requires withholding when a “foreign person” disposes of a U.S. real property interest. The withholding is an advance payment of the seller’s federal tax, and the buyer is usually responsible for collecting and remitting it. You can review the federal framework in the IRS overview of reporting and paying tax on U.S. real property interests.

Who is a “foreign person”

For FIRPTA, a foreign person can be a nonresident alien individual, foreign corporation, partnership, trust, or estate. If the seller is a U.S. person, providing a valid certification of non-foreign status with a U.S. TIN allows the buyer to skip withholding. The IRS outlines these definitions in its FIRPTA guidance.

How withholding is calculated

The standard federal withholding rate is 15% of the “amount realized,” which generally means the gross sales price plus certain liabilities and non-cash consideration. It is not based on your taxable gain, so the amount withheld can be higher than the actual tax you owe. The IRS details the 15% rate and who must withhold in its page on FIRPTA withholding.

Ways to avoid or reduce withholding

Use a non-foreign certification when eligible

If you are a U.S. person, a signed certification of non-foreign status that includes your U.S. TIN typically lets the buyer rely on it and not withhold. Closings in Manhattan often include this certification in the contract package.

Consider statutory exceptions

If the buyer is an individual who will use the property as a residence and the price is $300,000 or less, FIRPTA withholding may not be required. This rule has specific occupancy criteria and is narrow. See the IRS list of exceptions from FIRPTA withholding for details.

Apply for a withholding certificate (Form 8288-B)

Foreign sellers can apply for a withholding certificate that reduces or eliminates withholding when the 15% would exceed the expected tax. The IRS generally processes a complete application in about 90 days, so start early. For timing expectations and processing, see the IRS internal guidance on withholding certificates. If you need a U.S. taxpayer identification number, follow the IRS ITIN guidance for buyers and sellers.

What to expect at closing in Gramercy Park

If withholding applies, the buyer or settlement agent must file Form 8288 and 8288-A and send payment to the IRS within 20 days of the transfer. Missing this deadline can expose the buyer to liability for tax, interest, and penalties. See the IRS Instructions for Forms 8288 and 8288-A for filing mechanics and deadlines.

In practice, many Manhattan closings escrow the required funds while a withholding certificate is pending or until the seller files a return to claim a refund. Clear escrow instructions and proof of the application help keep the process on track. Title and closing professionals often follow practices similar to those described in this FIRPTA escrow overview.

New York requirements to plan for

NY State nonresident estimated tax at recording

New York requires nonresident sellers to present Form IT-2663 for real property, or IT-2664 for co-ops, with payment or exemption at the time of recording. Manhattan buyers and attorneys typically require evidence of this before or at closing because it affects recording. See the state’s guidance on nonresident real property estimated tax.

NYC and State transfer taxes

Plan for NYC Real Property Transfer Tax and New York State transfer tax in your closing costs. For residential property, NYC RPTT is generally 1% up to $500,000 and 1.425% above $500,000, with different rates for non-residential transfers. Review rates and process on the NYC Department of Finance page for the Real Property Transfer Tax. The State’s separate mansion tax applies to residential purchases of $1,000,000 and above and is commonly part of Manhattan closing conversations.

Co-op sales in Gramercy Park

Co-op transactions involve a transfer of shares and a proprietary lease, which can be a U.S. real property interest for FIRPTA analysis. New York uses Form IT-2664 for co-op sellers. Board approval, sponsor considerations, and coordination among buyer, seller, counsel, and the co-op corporation often add steps. Access the state’s income tax forms page for the co-op form and instructions.

A simple timeline for a smooth closing

Pre-contract

• Identify the seller’s tax residency status at the outset. If the seller is foreign, discuss standard 15% federal withholding and NY State procedures.
• If reduction is desired, start the Form 8288-B application and, if needed, the ITIN process early per the IRS FIRPTA overview.

Contract period

• If the seller is a U.S. person, collect a signed non-foreign certification with a valid U.S. TIN.
• If the seller is foreign, decide who will prepare and file Forms 8288 and 8288-A, and set escrow instructions.

Pre-closing and closing

• If withholding applies and no reduction has been granted, escrow 15% of the amount realized.
• File Forms 8288 and 8288-A and remit payment within 20 days of closing.
• For nonresident sellers, prepare and present NYS IT-2663 or IT-2664 at recording. Confirm NYC and State transfer tax figures.

After closing

• The seller files the appropriate U.S. tax return and uses the stamped 8288-A to claim credit for withheld amounts. If withholding exceeded the tax due, a refund may be available.

Practical checklist you can use

• Confirm seller status and collect a W-9 or non-foreign affidavit with U.S. TIN if the seller is a U.S. person.
• For foreign sellers, explain the 15% federal withholding exposure and NYS IT-2663 or IT-2664 requirement.
• If reduction is appropriate, apply for an IRS withholding certificate and, if needed, an ITIN as early as possible.
• Set escrow instructions and responsibility for preparing Forms 8288 and 8288-A. Track the 20-day filing deadline.
• Include NYC and State transfer taxes and NYS nonresident forms in your pre-closing checklist to avoid recording delays.
• Engage experienced closing counsel and tax advisors when FIRPTA could apply. Timing and documentation drive outcomes.

Common pitfalls to avoid

• Waiting too long to start Form 8288-B or ITIN, which can force full withholding at closing.
• Confusing taxable gain with the FIRPTA base. The IRS requires withholding on the gross amount realized, not the gain.
• Skipping the NYS nonresident form at recording, which can delay or derail the filing.
• Missing the federal 20-day deadline for Forms 8288 and 8288-A, which can expose the buyer to penalties. See the IRS 8288 instructions for deadlines and penalties.

Ready to plan a seamless Gramercy Park closing with cross-border confidence? Reach out to Sofia Falleroni for discreet, concierge-level guidance and trusted referrals to legal and fiscal partners.

FAQs

What is FIRPTA and why does it matter in Manhattan closings?

• FIRPTA is a federal rule that requires buyers to withhold tax when a foreign person sells a U.S. real property interest, and it can affect cash at closing and timelines in Gramercy Park. See the IRS FIRPTA overview.

How much does the buyer typically withhold under FIRPTA?

• In most cases, the buyer withholds 15% of the amount realized, which is usually the gross sales price plus certain liabilities. See the IRS on FIRPTA withholding.

Can a seller avoid FIRPTA withholding entirely?

• Yes, if the seller provides a valid non-foreign certification with a U.S. TIN or if the IRS issues a withholding certificate that reduces or eliminates withholding. Review FIRPTA exceptions.

What New York State forms apply for nonresident sellers?

• Nonresident sellers typically present Form IT-2663 for real property or Form IT-2664 for co-ops at recording. See NYS guidance on nonresident real property estimated tax.

What are the filing deadlines for the buyer if withholding occurs?

• The buyer or settlement agent files Forms 8288 and 8288-A and pays the IRS within 20 days of the transfer. See the IRS 8288 instructions.

How are Gramercy Park co-op sales handled under FIRPTA?

• Co-op share transfers can be subject to FIRPTA, and New York uses IT-2664 for nonresident estimated tax. Early coordination with counsel and the co-op is key. See the NYS income tax forms page.