Quick answer: when a foreign person sells Florida real estate, the buyer withholds 15% of the gross sale price for the IRS, calculated on the full price, not the profit. Apply for a withholding certificate (Form 8288-B) if your actual tax is lower, and start planning at purchase, not at listing.
Every foreign seller in Florida faces the same closing-table shock: a check for 15% of the entire sale price, made out to the IRS, deducted before the seller sees a cent. On a $750,000 Miami condo, that is $112,500 locked up regardless of whether the seller made any profit at all. The withholding often exceeds the actual tax owed, but recovering the difference means filing a US return and waiting four to eight months for a refund. Reduced rates (10% or 0%) apply only when the buyer will occupy the home and the price stays under $1,000,000. Investment property sales almost always face the full 15%.
Florida Estate publishes independent research, not legal or tax advice. FIRPTA rules, IRS processing times, and residence exceptions change. Confirm your status and obligations with a US CPA and Florida-licensed real estate attorney before listing or closing.
Related guides: Florida Property for Foreign Buyers · Florida Due Diligence Checklist · Florida Property Investment Guide · Florida Rental Yield Guide
FIRPTA and why does it apply to Florida property sales
FIRPTA is a US federal withholding rule, not a Florida state tax, that applies when a foreign person sells an interest in US real property. Florida accounts for 21% of all US foreign buyer transactions, which means tens of thousands of international owners will eventually sell Miami condos, Orlando vacation homes, Tampa rentals, and Naples beach properties subject to these rules.
Congress enacted FIRPTA in 1980 because the IRS had no reliable way to collect capital gains tax from sellers who left the United States after closing. Rather than chasing refunds across borders, the law shifts collection to the buyer at the closing table. The buyer withholds a percentage of the gross sale price and remits it to the IRS. The foreign seller then files a US federal income tax return, reports the actual gain, and claims credit for the amount withheld.
Three facts foreign owners routinely get wrong:
- Withholding is calculated on the sale price, not the profit. A seller who breaks even can still have 15% of the full price withheld.
- FIRPTA does not create a new 15% tax rate. It is a deposit against the seller’s normal US tax on the gain, often at long-term capital gains rates for real property.
- The buyer faces liability if withholding is skipped. Title companies collect the funds, but the legal duty sits with the purchaser.
If you are buying Florida property as a foreign national, read our Florida Property for Foreign Buyers guide for purchase-side entity structure, ITIN setup, and estate tax planning. This article focuses entirely on the sale-side mechanics you will face when you exit.
Who counts as a foreign person under FIRPTA?
FIRPTA status follows US tax law definitions, so the 15% withholding on the gross sale price hits non-resident alien individuals, foreign corporations and partnerships, foreign trusts and estates, and single-member LLCs owned by a foreign individual. US citizens living abroad and green card holders are not foreign persons, so a Canadian citizen with a US green card escapes FIRPTA, while a UK citizen renting in Florida six months per year may still be a non-resident alien. In the year ending July 2025, 16,401 international transactions closed in Florida and 67% of buyers resided abroad at purchase, so a large share of those owners will sell within 5 to 15 years. A written FIRPTA affidavit and a CPA opinion should exist before the property is marketed, because guessing at closing creates buyer liability and seller delays.
FIRPTA status follows US tax law definitions, not passport aesthetics or where you spend summers.
Generally subject to FIRPTA withholding:
- Non-resident alien individuals (no US green card, not meeting substantial presence test as a resident)
- Foreign corporations and partnerships not treated as US persons
- Foreign trusts and foreign estates
- Disregarded entities (single-member LLCs) when the owner is a foreign individual
Generally not subject to FIRPTA withholding:
- US citizens, even if living abroad full time
- US lawful permanent residents (green card holders)
- Corporations organized under US law that are not foreign-owned shells treated as foreign
- Most US partnerships and US grantor trusts
Gray areas appear constantly in Florida transactions: a Canadian citizen with a US green card is not a foreign person; a UK citizen renting in Florida six months per year may still be a non-resident alien; a foreign parent holds property through a US LLC taxed as a corporation. Get a written FIRPTA affidavit and CPA opinion before marketing the property. Guessing at closing creates buyer liability and seller delays.
Florida Estate tracks international volume through NAR and Florida Realtors data: 16,401 international transactions closed in Florida in the year ending July 2025, with 67% of buyers residing abroad at purchase. A large share of those owners will sell within 5 to 15 years. Each exit potentially triggers FIRPTA unless the seller has become a US person in the interim.
How the 15% FIRPTA withholding works at closing
The standard rate is 15% of the amount realized, typically the gross sale price before commissions, unless the contract allocates obligations differently. The withholding is taken from the seller’s net proceeds at closing and sent to the IRS with Form 8288 within 20 days of the transfer date.
Worked example, investment condo sale in Miami-Dade:
| Item | Amount |
|---|---|
| Contract sale price | $720,000 |
| Original purchase price (2019) | $510,000 |
| Capital improvements (documented) | $42,000 |
| Adjusted basis | $552,000 |
| Estimated gain | $168,000 |
| FIRPTA withholding (15% of price) | $108,000 |
| Estimated federal tax on gain (approx. 20% rate) | ~$33,600 |
| Excess withheld pending refund | ~$74,400 |
The seller walks away with substantially less cash at closing than a US person selling the same unit. Cash flow planning matters: many foreign sellers use sale proceeds to fund the next purchase abroad and do not budget for a six-month IRS refund cycle.
Who physically holds the money: The Florida title company or closing attorney deducts withholding from the seller’s proceeds, wires the IRS portion separately, and distributes the balance per the settlement statement. If the seller owes mortgages, HOA arrears, or special assessments, those pay first, but FIRPTA withholding still comes out of the seller’s equity, not the buyer’s pocket beyond the legal obligation to ensure remittance.
FIRPTA exceptions: when withholding drops to 10% or zero
Statutory exceptions exist for personal residence sales when the buyer certifies intent to occupy the property. These exceptions are narrow. Florida investors who bought for Airbnb income or long-term lease should assume full 15% applies.
| Sale price (buyer will occupy as residence) | FIRPTA withholding rate |
|---|---|
| $300,000 or under | 0% |
| Over $300,000 up to $1,000,000 | 10% |
| Over $1,000,000 | 15% (no residence discount) |
Requirements for the reduced rates:
- The property must be used by the buyer as a personal residence (not acquired primarily for rental or resale)
- The buyer must sign an affidavit at closing confirming intent to occupy
- The seller must still be a foreign person, the exception only adjusts the rate
A foreign seller disposing of a $285,000 Orlando townhome to a US family who will live in it may qualify for 0% withholding. The same seller disposing of a $450,000 Miami Beach condo to an investor buyer faces 15%. A $850,000 Sarasota home sold to a foreign buyer who will occupy it triggers 10%, not 15%.
What does not qualify: Short-term rental properties, vacant land held for development, commercial buildings, and flip transactions. If the buyer is an LLC acquiring for rental, the residence exception fails even when the price is modest.
Withholding certificate: form 8288-b step by step
Foreign sellers whose actual US tax liability is lower than 15% of the sale price should apply for an IRS withholding certificate before closing. This is the primary tool to avoid locking up tens of thousands of dollars for months.
Typical process:
- Engage a US CPA with FIRPTA experience immediately when the property goes under contract: not two weeks before closing.
- Prepare Form 8288-B with a detailed calculation of estimated gain, depreciation recapture (if rental), and applicable tax rates.
- Submit to the IRS with supporting documents: purchase HUD-1 or closing statement, improvement invoices, prior depreciation schedules, and sale contract.
- Wait for IRS response: historically 60 to 90 days, though timing varies. Some closings delay; others hold full withholding in escrow until the certificate arrives.
- Close at the certified rate and file the certificate with Form 8288.
Example certificate outcome:
| Sale price | Default 15% withholding | IRS certificate rate | Cash preserved at closing |
|---|---|---|---|
| $500,000 | $75,000 | 4% ($20,000) | $55,000 |
| $1,200,000 | $180,000 | 6% ($72,000) | $108,000 |
The IRS grants certificates when the seller’s documentation is credible and the math is clear. Incomplete basis records, common when foreign owners paid cash in 2015 and never filed US returns, make certificates harder and slower.
Florida Estate observation: Sellers who obtained an ITIN at purchase and filed annual returns on rental income almost always receive faster certificate approvals than sellers appearing before the IRS for the first time at sale.
IRS forms: 8288, 8288-a, and 8288-b explained
FIRPTA paperwork is form-heavy, and each IRS form has a different filer and deadline. The foreign seller and CPA file Form 8288-B before closing to request a reduced withholding certificate, which has historically taken 60 to 90 days. The buyer or closing agent files Form 8288 within 20 days after closing to report the withholding remitted, with Form 8288-A attached as the statement of withholding per foreign seller. A seller without a US tax ID files Form W-7 for an ITIN, and the IRS will not process a refund without one. After closing, the seller attaches copies of Form 8288-A to the Form 1040-NR as proof of withholding, and the refund takes 4 to 8 months. A missing or late Form 8288 exposes the buyer to the full withholding amount plus penalties.
FIRPTA paperwork is form-heavy. Each document serves a distinct function.
| Form | Who files | When | Purpose |
|---|---|---|---|
| Form 8288-B | Foreign seller (with CPA) | Before closing | Request reduced withholding certificate |
| Form 8288 | Buyer / closing agent | Within 20 days after closing | Report total withholding remitted to IRS |
| Form 8288-A | Attached to 8288 | At filing | Statement of withholding per foreign seller |
| Form W-7 (if needed) | Foreign seller | Any time | ITIN application if seller lacks US tax ID |
The buyer’s closing agent in Florida typically prepares Form 8288 and 8288-A. The seller’s CPA prepares Form 8288-B and the seller’s post-closing Form 1040-NR. Copies of 8288-A are essential, the seller attaches them to the US tax return as proof of withholding.
Missing or late Form 8288 exposes the buyer to the full withholding amount plus penalties. Foreign sellers should confirm in the closing instructions that the title company has a FIRPTA workflow, not merely a generic residential closing desk.
FIRPTA for foreign sellers: Florida condo vs single-family home
Mechanically, FIRPTA applies the same way to a Surfside condo, a Kissimmee vacation villa, and a Naples single-family home. Practically, the asset type changes your numbers.
Condo sellers often face:
- Special assessments discovered late (SB 4-D compliance costs) that reduce net proceeds but not gross withholding
- HOA estoppel delays that compress the window for Form 8288-B filing
- Higher frequency of investor buyers, meaning fewer residence exceptions
Single-family sellers near the $300,000 and $1,000,000 thresholds more often qualify for 0% or 10% rates when selling to occupant buyers. Southwest Florida and Central Florida price points frequently land in the partial-exception band.
Short-term rental operators who filed Schedule E on Form 1040-NR must account for depreciation recapture taxed at higher rates. That increases actual liability and affects the optimal certificate request. If you never took depreciation but were entitled to, a CPA may still need to address prior returns before the sale.
For condo-specific due diligence that affects your net at sale, reserves, milestone inspections, special assessments; see the Florida Due Diligence Checklist. SB 4-D issues discovered at sale can kill a closing or force price reductions that do not reduce FIRPTA withholding, which is calculated on the contract price.
Buyer obligations: what Florida purchasers must verify
US buyers purchasing from foreign sellers sometimes hear “FIRPTA is the seller’s problem.” It is not. The buyer is the withholding agent.
Buyer checklist:
- Obtain a FIRPTA affidavit from the seller at contract stage. If the seller claims US person status, document it.
- Confirm withholding in escrow instructions: amount, payee (IRS), and deadline.
- Verify the title company has FIRPTA experience, especially on international deals in Miami, Fort Lauderdale, and Orlando.
- Never skip withholding because the seller promises to “handle it later.” The IRS collects from you.
- Budget for closing delays if a Form 8288-B is pending.
Foreign buyers purchasing from foreign sellers still have buyer-side FIRPTA duties on the seller’s transfer. When those same foreign buyers later sell, they face withholding as sellers themselves. The cycle is predictable, plan for both sides.
Investors comparing markets should model FIRPTA drag on net IRR. Our Florida Rental Yield Guide helps quantify income during ownership; this guide quantifies the exit haircut on gross proceeds.
Tax return and refund: recovering excess FIRPTA withholding
After closing, the foreign seller files a US federal income tax return reporting the disposition. Non-resident aliens typically use Form 1040-NR with appropriate schedules. The return shows:
- Gross sale price
- Adjusted basis (purchase price plus improvements minus depreciation taken)
- Taxable gain
- Tax due at applicable rates
- Credit for FIRPTA amounts withheld (from Form 8288-A)
- Refund request for excess withholding
Timeline expectations:
| Stage | Typical duration |
|---|---|
| Closing to tax return preparation | 2 to 8 weeks |
| IRS processing of 1040-NR refund | 4 to 8 months |
| Total cash tied up if no certificate | Up to 9 months |
Sellers who rented the property must also reconcile prior-year rental reporting, pay any balance due, and address state-level Florida intangible taxes or local tourist taxes if applicable. A clean compliance history speeds refunds.
No US tax ID? Apply for an ITIN via Form W-7 before filing. The IRS will not process a refund without a valid identifier. Foreign buyers who obtained an ITIN at purchase, as recommended in our foreign buyer guide, avoid a common sale-week scramble.
Entity structure: LLC, trust, and corporate ownership at sale
How you hold title affects FIRPTA at sale.
Personal name (foreign individual): Straightforward FIRPTA analysis. The individual is a foreign person; 15% applies unless exceptions or a certificate apply.
US LLC disregarded entity owned by foreign individual: Treated as the foreign owner for FIRPTA. The LLC itself is not a shield.
US LLC taxed as corporation, foreign-owned: Complex. The entity may be foreign for FIRPTA; distributions and stock sales trigger separate analysis. Some structures require withholding on the entity interest rather than only the deed transfer.
Foreign holding company owning a US LLC that owns property: Layered structures demand specialist review. The IRS has challenged arrangements designed solely to avoid FIRPTA without economic substance.
Best practice: Review structure with a US international tax attorney at purchase and again before listing. Changing entities solely to avoid FIRPTA immediately before sale often fails and can delay closing.
Florida’s popularity with Canadian, Colombian, Brazilian, and Argentine buyers means many properties sit in mixed structures, personal name for financing, later transferred to LLC for liability. Each transfer may be a taxable US event for FIRPTA purposes. Document every internal transfer.
FIRPTA planning timeline: from purchase to sale
Treat FIRPTA as a multi-year project, not a closing-week surprise.
| Phase | Action |
|---|---|
| At purchase | Obtain ITIN; choose entity with CPA; keep all closing and improvement records |
| During ownership | File US returns on rental income; track depreciation; pay Florida property taxes on time |
| 12 months before sale | Model gain and withholding; discuss certificate timeline with CPA |
| At listing | Disclose foreign status to buyer agent; prepare affidavit package |
| Under contract | File Form 8288-B if needed; align closing date with IRS response |
| At closing | Verify correct withholding on settlement statement |
| After closing | File 1040-NR; attach 8288-A; monitor refund |
Foreign owners who skip annual compliance often discover at sale that prior rental income was never reported. The IRS may offset refunds against back taxes, turning an expected $50,000 return into a balance due.
Common FIRPTA mistakes foreign sellers make in Florida
-
Assuming withholding equals tax. You may overpay significantly at closing if you do not file for a certificate or refund.
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Poor basis documentation. No receipts for a $80,000 renovation means a higher reported gain and a slower certificate.
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Missing the residence exception paperwork. A qualifying $950,000 home sale to an occupant buyer should use 10% withholding, not 15%; if affidavits are correct.
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Listing before entity review. Transferring to a new LLC weeks before closing can trigger additional FIRPTA events.
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Ignoring buyer concerns. US buyers nervous about FIRPTA liability may demand price reductions or walk away. Proactive CPA letters help.
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Confusing FIRPTA with Florida documentary stamp tax. Doc stamp on the deed (seller-side in Florida) is separate from federal FIRPTA withholding.
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Skipping due diligence on the way out. Buyers request estoppels, inspection responses, and title clearances. Sellers unprepared for SB 4-D questions on older condos lose time. Run the sell-side checklist parallel to the buy-side framework in our due diligence guide.
Florida Estate data: why exit tax planning matters in top markets
Florida international buyers paid an average $635,164 per transaction in the year ending July 2025, with 47% paying all cash. Higher prices mean higher absolute withholding: 15% on $635,000 is $95,274 held at closing before any deduction for actual tax.
Markets with the heaviest foreign seller volume over the next decade:
| Market | Foreign buyer profile | FIRPTA note |
|---|---|---|
| Miami-Dade / Broward | South American, European investors | High prices → full 15% common |
| Orlando / Kissimmee | STR and vacation homes | Investor buyers → exceptions rare |
| Southwest Florida (Naples, Sarasota) | Canadian snowbirds | More residence sales → 10% band possible |
| Tampa Bay | Mixed investment and relocation | Price mix spans all three withholding tiers |
Investors choosing where to buy should weigh exit liquidity alongside entry yield. Our Best Areas to Invest in Florida 2026 guide compares markets; combine it with this exit model for a full hold-period picture.
Working with professionals on FIRPTA transactions
A Florida FIRPTA sale typically requires:
- US CPA with FIRPTA and 1040-NR experience, certificate, return, refund
- Florida real estate attorney, contract language, affidavits, escrow instructions
- Experienced title company, Form 8288 preparation and timely remittance
- Listing agent familiar with international sellers, sets buyer expectations early
Budget $2,500 to $6,000 for CPA and legal support on a mid-six-figure sale with certificate application, modest relative to a five-figure withholding error.
FIRPTA and your broader Florida investment strategy
FIRPTA does not mean foreigners should avoid Florida real estate. It means informed owners outperform surprised ones. The state remains the top US destination for cross-border capital, with transparent title systems, deep liquidity, and no state income tax on individuals.
Integrate FIRPTA into your hold analysis:
- Gross yield from rental operations
- Annual compliance cost (CPA, property management, insurance)
- Exit withholding drag (this guide)
- Estate tax exposure (foreign buyer guide)
An investment that shows 8% gross yield but 15% gross withholding on a low-basis sale may still be excellent; if you modeled it on day one.
Florida Estate provides independent research for educational purposes only. This article does not constitute legal, tax, or investment advice. FIRPTA rules, IRS procedures, and exceptions change. Consult a US CPA and Florida-licensed attorney before selling or buying property subject to FIRPTA.
Florida Estate’s insider tip
Insider tip: Ask for the certificate numbers before you list. On a $500,000 sale the default 15% withholding is $75,000, while an IRS certificate at 4% would hold only $20,000 and preserve $55,000 at closing. Hire the CPA the day the property goes under contract, since the IRS response has historically taken 60 to 90 days, and keep the basis records, because no receipts for an $80,000 renovation means a higher reported gain and a slower certificate.
Frequently Asked Questions
FIRPTA requires the buyer to withhold 15% of the gross sale price when a foreign person sells US real property, including Florida homes and condos. On a $600,000 sale, $90,000 is remitted to the IRS at closing. This is a prepayment of US federal tax on the gain, not a flat 15% tax on profit. The seller files a US tax return and may receive a refund if the actual liability is lower.
A foreign person is a non-resident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. US citizens, green card holders, and entities treated as US persons are not subject to FIRPTA withholding. Dual citizens who are US persons for tax purposes are exempt. The status is determined at the date of transfer, based on IRS definitions.
Yes. The foreign seller can apply for an IRS withholding certificate using Form 8288-B before closing. If approved, the certificate specifies a lower withholding amount based on estimated actual tax liability. Statutory exceptions also reduce withholding to 10% or zero when the buyer will use the property as a personal residence and the price falls within specific thresholds.
The buyer is legally liable for FIRPTA compliance. In practice, Florida title companies collect the withholding, prepare Forms 8288 and 8288-A, and remit funds to the IRS on the buyer's behalf. If withholding is not made, the IRS can collect the full amount from the buyer plus interest and penalties.
After filing a US federal income tax return reporting the sale (typically Form 1040-NR with Schedule D), foreign sellers commonly wait 4 to 8 months for an IRS refund of excess withholding. Sellers who obtain a withholding certificate before closing avoid tying up excess cash for months after the sale.
It depends on whether the LLC is classified as a US or foreign person for tax purposes. Disregarded entities owned by foreign individuals are generally treated as foreign sellers. Entity structure should be reviewed with a US CPA before listing, not after an offer arrives.
Yes. If the buyer signs an affidavit stating intent to use the property as a personal residence, withholding is 0% when the sale price is $300,000 or under, and 10% when the price is over $300,000 up to $1,000,000. Above $1,000,000, the standard 15% applies even for residence purchases.
Yes. FIRPTA is an exit tax mechanism, but the time to plan is at purchase. Foreign buyers should model sale proceeds net of withholding, confirm entity structure with a CPA, obtain an ITIN early, and keep clean cost basis records. See our Florida Property for Foreign Buyers guide for purchase-side structure.
Plan your Florida property exit or purchase
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