Buyer is paying $900k and taking over a $100k mortgage — what's the FIRPTA withholding?

FIRPTA withholding under section 1445 is generally 15% of the amount realized, and amount realized is broader than the cash that hits your account. The regulations define it to include cash paid or to be paid, the fair market value of any other property transferred, and — critically — liabilities the buyer assumes or that the property remains subject to immediately before and after the transfer. So the assumed mortgage is part of the base.

Cash of $900,000 plus the $100,000 mortgage the buyer takes over gives an amount realized of $1,000,000. At the default 15% rate, withholding is 15% × $1,000,000 = $150,000. That is the figure that should be reported on Form 8288 with a Form 8288-A and remitted to the IRS, generally by the 20th day after the transfer. Notice the squeeze: you receive $900,000 of cash but $150,000 is computed on a $1,000,000 base, so the withholding eats a larger slice of your actual proceeds than a naive 15%-of-cash estimate suggests.

This gross-base mechanic is exactly why FIRPTA so often over-collects. If your adjusted basis is high and your real gain is modest, $150,000 can far exceed the federal income tax you actually owe on the sale — and you would otherwise wait months for the excess back as a refund. The fix is a Form 8288-B withholding certificate that asks the IRS to approve a reduced amount tied to your maximum tax liability. If the deal is structured with deferred payments, the over-collection is even sharper because withholding still keys off the full price up front — see /guides/installment-sale-foreign-sellers.