FIRPTA Tax Guide for International Sellers
Selling your Disney Vacation Club membership as a non-U.S. citizen? Understand your tax obligations and how to potentially recover thousands in withheld funds.
Understanding the Basics
What is FIRPTA?
The Foreign Investment in Real Property Tax Act (FIRPTA) is a United States federal tax law enacted in 1980. This legislation requires that when a non-U.S. person sells real property located in the United States, including Disney Vacation Club timeshare interests, the buyer or closing agent must withhold 15% of the gross sales price and submit it directly to the Internal Revenue Service.
Disney Vacation Club memberships are legally classified as deeded real estate interests in Florida or California, depending on your home resort. This classification means that international sellers are subject to FIRPTA withholding requirements, regardless of whether the sale results in a profit or loss.
The purpose of FIRPTA is to ensure that foreign nationals pay appropriate taxes on gains from U.S. real estate transactions. However, the 15% withholding is often significantly more than the actual tax liability, which is why most international DVC sellers are entitled to substantial refunds.
💡 Important: The 15% withholding is not your final tax bill. It is a prepayment that the IRS holds while your actual tax liability is calculated. Most sellers who purchased their DVC membership years ago and sell at current market rates qualify for partial or full refunds of the withheld amount.
Determining Your Status
Who Does FIRPTA Apply To?
FIRPTA applies to individuals who are considered "foreign persons" under U.S. tax law. Understanding your classification is essential before selling your DVC membership, as it determines whether withholding will occur at closing.
FIRPTA Applies If You:
- • Are not a U.S. citizen
- • Do not hold a valid green card
- • Have not met the substantial presence test
- • Are a resident of Canada, UK, Australia, or other countries
FIRPTA Does NOT Apply If You:
- • Are a U.S. citizen (even living abroad)
- • Hold a valid permanent resident card
- • Meet the IRS substantial presence test
- • Are a resident alien for tax purposes
DVC Sales serves international sellers from around the world, including Canada, the United Kingdom, Australia, Germany, France, New Zealand, Ireland, and many other countries. Our team has extensive experience navigating FIRPTA requirements and can guide you through the entire process.
Step-by-Step Guide
The FIRPTA Process & Refund Timeline
Complete Your DVC Sale
List and sell your DVC membership through a licensed broker. At closing, the title company automatically withholds 15% of the gross sales price and remits it to the IRS on your behalf.
Timeline: 30-60 daysObtain an ITIN (If Needed)
If you do not have a U.S. Social Security Number, you will need an Individual Taxpayer Identification Number (ITIN). Apply using IRS Form W-7. A FIRPTA specialist can assist with this application.
Timeline: 4-8 weeksFile Form 1040-NR
Submit IRS Form 1040-NR (U.S. Nonresident Alien Income Tax Return) to report the sale and calculate your actual tax liability. This form shows whether you owe taxes or are due a refund.
Timeline: 1-2 weeks to prepareReceive Your Refund
Once the IRS processes your return, any excess withholding is refunded to you. The typical processing time is approximately 90 days, though it can vary based on IRS workload and the completeness of your filing.
Timeline: ~90 days after filingUnderstanding Your Refund Potential
Why Most DVC Sellers Qualify for Refunds
The DVC resale market has unique characteristics that often result in favorable tax outcomes for international sellers. Many original DVC owners purchased their memberships directly from Disney at prices significantly higher than current resale values. This means that when selling on the secondary market, many owners actually realize a loss rather than a gain.
Even for owners who purchased at lower prices and may have some capital gains, the actual tax owed is typically far less than the 15% withheld. Capital gains tax rates for non-resident aliens are generally around 15-20% of the profit, not 15% of the entire sale price. This fundamental difference is why refunds are so common.
Additionally, selling expenses such as broker commissions, closing costs, and Disney's estoppel fee can be deducted from your gains, further reducing any tax liability. When you account for all allowable deductions, many sellers find their actual tax burden is minimal or even zero.
Example Calculation:
A Canadian seller purchases DVC for $20,000 in 2015 and sells for $18,000 in 2024. The 15% FIRPTA withholding is $2,700. However, since the sale resulted in a $2,000 loss (plus closing costs), no capital gains tax is actually owed. The seller can file for a full refund of the $2,700 withheld.
Responsibilities Overview
Buyer and Seller FIRPTA Requirements
Both buyers and sellers have specific responsibilities under FIRPTA. Understanding these requirements helps ensure a smooth transaction without delays or penalties.
| Seller Status | Buyer Status | FIRPTA Forms Required | Buyer Provides |
|---|---|---|---|
| Non-U.S. | Non-U.S. | Yes | SSN or ITIN |
| Non-U.S. | U.S. | Yes | — |
| U.S. | Non-U.S. | No | — |
| U.S. | U.S. | No | — |
Note for Buyers: If you are purchasing from an international seller, the withholding is your responsibility as the buyer. Failure to properly withhold and remit the 15% to the IRS can result in penalties. Our title company handles this automatically to protect all parties.
Interactive Calculator
Estimate Your FIRPTA Refund
Use this calculator to estimate how much of the 15% FIRPTA withholding you may be able to recover. Enter your original purchase price and expected selling price to see your potential refund. For a precise calculation, consult with a FIRPTA tax specialist at DVCFIRPTA.com.
| Description | When Buying | When Selling | Converted |
|---|---|---|---|
| Contract Price | $ |
$ |
|
| Broker Commission | — | ||
| Disney Estoppel Fee | — | ||
| FIRPTA Agent Fee | — | $ |
|
| 15% FIRPTA Withholding | — | ||
| Net to Seller at Closing | — | ||
| Taxable Gain/(Loss) | — | ||
| Actual Tax Owed (20% of gain) | — | ||
| Estimated FIRPTA Refund | — | ||
| Percent of Withholding Refunded | — |
This calculator provides estimates only. Actual refund amounts depend on individual circumstances.
Get a Personalized FIRPTA ConsultationYour FIRPTA Options
Choose the service level that is right for you. Option 1 is required for all non-US sellers — even if you choose to do nothing about claiming a refund.
Basic Compliance
Required Minimum
one-time fee
- IRS Form 8288-B filing
- 15%% withholding processed
- Title company coordination
- No ITIN application
- No refund request filed
All non-US sellers must complete this step
IRS keeps your 15%% until you file for refund
ITIN + Refund
Get your money back
$250 + $600 add-on
- Everything in Option 1
- ITIN application (W-7)
- Refund request filed
- No U.S. tax return (1040NR)
You need an ITIN to claim any refund from the IRS
Full Tax Service
Complete tax return filing
$250 + $1,200 add-on
- Everything in Option 2
- U.S. Tax Return (1040NR)
- Complete tax filing for maximum refund
Not sure which option is right for you?
Get Started at DVCFIRPTA.comReady to Sell Your DVC Membership?
Our team has helped thousands of international sellers navigate FIRPTA requirements. Let us guide you through the process and maximize your refund potential.
Understanding FIRPTA for DVC Non-US Sellers
The Foreign Investment in Real Property Tax Act (FIRPTA) is a United States tax law enacted in 1980 that requires foreign persons to pay U.S. income tax on gains from the sale of U.S. real property interests. Disney Vacation Club memberships are deeded real estate interests, which means they fall under FIRPTA regulations when sold by non-U.S. persons.
When a non-U.S. person sells a DVC membership, the buyer or closing agent is required by law to withhold 15% of the gross sales price and remit it to the Internal Revenue Service. This withholding applies regardless of whether the seller actually has a tax liability or will owe any taxes on the sale. The 15% is calculated on the total sales price, not on the profit or gain from the sale.
Who is Considered a Foreign Person?
Under FIRPTA, a foreign person includes nonresident alien individuals, foreign corporations, foreign partnerships, foreign trusts, and foreign estates. U.S. citizens living abroad are not considered foreign persons for FIRPTA purposes. Resident aliens who meet the substantial presence test or hold a green card are also not subject to FIRPTA withholding.
The Withholding Process
The title company or closing agent handling the DVC resale transaction is responsible for collecting the 15% withholding and submitting it to the IRS using Form 8288. The seller receives a copy of Form 8288-A, which serves as proof that the withholding was remitted to the IRS. This documentation is essential for any future refund claims.
Claiming a Refund
Many non-U.S. sellers may be entitled to a partial or full refund of the withheld amount. The actual tax owed depends on various factors, including the original purchase price, the sales price, and how long the membership was owned. To claim a refund, sellers must file a U.S. tax return using Form 1040-NR (U.S. Nonresident Alien Income Tax Return).
Before filing a tax return, non-U.S. persons who do not already have a U.S. tax identification number must apply for an Individual Taxpayer Identification Number (ITIN) using Form W-7. The IRS requires an ITIN to process any tax return or refund request from a foreign person.
Important Considerations
Non-U.S. sellers should be aware that failing to comply with FIRPTA requirements can result in penalties for the buyer or closing agent. The withholding requirement exists to ensure the IRS can collect any taxes owed on the sale, as it would otherwise be difficult to enforce U.S. tax obligations on persons residing outside the country.
The tax basis for calculating gain or loss on a DVC sale includes the original purchase price plus any capital improvements. Proper documentation of the original purchase, including the closing statement from when the membership was acquired, is important for accurately calculating any taxable gain and potential refund amount.
Professional tax assistance is strongly recommended for non-U.S. sellers navigating FIRPTA requirements. The process involves multiple IRS forms, strict deadlines, and coordination between the closing agent, the seller, and the IRS. Working with professionals who specialize in FIRPTA can help ensure compliance and maximize any potential refund.