FIRPTA in Florida: the 15% withholding when foreigners sell

What is FIRPTA?

Short answer: FIRPTA is the Foreign Investment in Real Property Tax Act. It makes the buyer collect part of the price when the seller is a foreign person, so the IRS can be sure the seller pays US tax on the sale.

Foreign owners must pay US tax on the gain when they sell US real estate. The IRS cannot easily collect that tax from someone who lives abroad, so the law puts the job on the buyer. The buyer is called the "transferee" and acts as the withholding agent. In a Florida closing, this happens in the closing statement, and the money goes to the IRS with two forms.

FIRPTA does not decide how much tax you owe. Your real tax depends on your gain, your costs and your situation. The withholding is a fixed percentage of the price, so it is often much more than the tax. That is why many sellers plan ahead.

Who is a "foreign person" under FIRPTA?

Short answer: a nonresident alien, or a foreign company, partnership, trust or estate. A resident alien for US tax purposes is not a foreign person.

For an individual, US tax residency does not depend on your visa or where you vote. The IRS says a non-citizen is a US resident for tax purposes if they pass the green card test or the substantial presence test (a count of days spent in the US) for the calendar year. If you pass either test, you give the buyer a certification of non-foreign status and no FIRPTA withholding applies. If you are not sure, ask a tax adviser before you list the home.

How much must the buyer withhold?

Short answer: 15% of the "amount realized", which for a normal sale is the sale price. Lower rates apply only when the buyer is an individual who plans to live in the home.

The rate is on the whole price, not on the gain, and the loan payoff does not reduce it. A seller with a large mortgage can find that the cash left at closing is less than the withholding. The Florida Realtors and Florida Bar contract warns about this: the seller may need to bring extra cash to closing.

When do the 10% and 0% rates apply?

Short answer: when the buyer is an individual who has definite plans to live in the home at least half of the days it is used, in each of the first two years after the purchase.

The IRS test in the Form 8288 instructions:

• The buyer or a family member must have definite plans to live in the property for at least 50% of the days it is used by anyone, in each of the first two 12-month periods after the sale.
• Days when the home is empty do not count.
• Family members include brothers and sisters, a spouse, parents and grandparents, and children and grandchildren.
• The buyer must be an individual. The IRS says the $300,000 exception does not apply when the buyer is a company, even if the company buys the home for a person. For the 10% rate, the IRS text says only "for use by the transferee as a residence".

The closing agent will usually ask the buyer to sign a statement about these plans. If the buyer is an investor who will rent the home out, the full 15% applies.

What other exceptions exist?

Short answer: no withholding when the seller signs a certification that it is not a foreign person, when the IRS issues a certificate that excuses or lowers it, and in a few other cases.

The IRS lists these exceptions:

• Certification of non-foreign status. A US seller, or a resident alien, signs a statement under penalty of perjury with its name, US tax number and home address. This is often called the "FIRPTA affidavit". The buyer can rely on it unless the buyer knows it is false or receives a notice that it is false.
• Withholding certificate from the IRS. It can lower the withholding or excuse it. See the next section.
• Nonrecognition notice. For some tax-free exchanges. It must be filed by the 20th day after the transfer.
• Others. A price (amount realized) of zero, a buyer that is a government body, and some publicly traded shares.

What is a withholding certificate (Form 8288-B)?

Short answer: an IRS letter that lets the buyer withhold less than 15%, often close to the seller's real tax. You apply on Form 8288-B, on or before the closing date.

How it works:

1. Who applies. The seller (transferor) or the buyer can file it. In most sales, the seller does.
2. The reason. Most applications say that the seller's maximum tax on the sale is less than the normal withholding. You show your purchase price, improvements and costs. Other grounds are an exemption, a tax-free exchange, or an installment sale.
3. When. On or before the day of the closing. The seller must tell the buyer in writing, on or before that day, that it has applied.
4. What happens at closing. If the application is still pending, the buyer still withholds the full amount, but it does not have to send it to the IRS yet. It sends the amount the IRS approves within 20 days after the IRS mails the certificate or the denial. Under the Florida contract, the buyer can hold this money in escrow at the seller's cost.
5. How long. The IRS says it acts within 90 days after it receives a complete application, including the tax numbers (TINs) of every party.

If you apply after the closing, a certificate can still allow an early refund, before you file your tax return. If the main reason for an application is to delay the payment, the IRS charges interest from the 21st day.

Do I need an ITIN?

Short answer: yes, in practice. A foreign individual without a Social Security number needs an ITIN (Individual Taxpayer Identification Number) to apply for a withholding certificate and to get credit for the tax withheld.

• You apply for an ITIN on IRS Form W-7.
• You can attach Form 8288-B to Form W-7 and send them together, to the address in the Form W-7 instructions.
• The IRS says you can request an ITIN for a FIRPTA sale as soon as there is a binding sale contract, not before.
• If your tax number is not on the forms, the IRS does not send you the stamped copy of Form 8288-A. You then must attach other proof of the withholding, such as the closing documents, to your tax return.

Start the ITIN as soon as you sign the contract. Every party on the 8288-B needs a TIN before the IRS's 90 days start.

What is the timeline from contract to refund?

Short answer: the seller tells the buyer at the contract, applies for a certificate by closing, the buyer pays the IRS within 20 days, and the seller files a US return the next year to get the rest back.

The forms are filed on paper with the IRS in Ogden, Utah. The IRS allows the payment by EFTPS (its electronic payment system), but the forms must still be filed. Electronic filing of Forms 8288 is planned, but the IRS has not given a date. Form 8288 (January 2026 version) now lets you add bank details for a refund by direct deposit.

What must the buyer do?

Short answer: the buyer must find out if the seller is a foreign person, withhold the right amount, and send it to the IRS on time. If it does not, the IRS can collect the tax from the buyer.

• Ask. The buyer or the closing agent asks the seller for a certification of non-foreign status. If the seller cannot sign one, withholding applies.
• Withhold. The Florida contract (Standard V) says the buyer shall withhold the right percentage and send it to the IRS on time.
• Report. File Form 8288 and Form 8288-A by day 20 and give the seller copies of the forms as filed.
• Liability. If the buyer does not withhold, the IRS can collect the tax and interest from the buyer, and penalties can apply.

In practice, the closing agent (a title company or a lawyer) usually holds the money and prepares the forms for the buyer. The legal duty is still the buyer's, so confirm in writing who will file.

Who pays the costs?

Short answer: in the standard Florida contract, the seller pays the charges for FIRPTA withholding and reporting.

Paragraph 9(a) of the Florida Realtors and Florida Bar AS IS contract lists "charges for FIRPTA withholding and reporting" as a seller cost. Your tax adviser's fee for the 8288-B and the tax return is also your cost. The seller also pays the Florida stamp tax on the deed. Our closing costs guide lists the other costs.

What if the seller is a company or an LLC?

Short answer: a foreign company is a foreign person, so FIRPTA applies. A US single-member LLC that is "disregarded" for tax is ignored: the owner is treated as the seller.

• Foreign corporation. FIRPTA applies, and it claims the credit on Form 1120-F.
• US LLC with one foreign owner. If the LLC is disregarded for tax (the default for a one-member LLC), the IRS treats the owner as the seller. The LLC cannot sign a non-foreign certification for its foreign owner, so withholding applies.
• US corporation or US partnership. It is not a foreign person, so the buyer does not withhold under these rules. The company has its own tax rules for foreign owners.

Many foreign buyers choose how to hold the home when they buy. That choice changes what happens when they sell, so ask a tax adviser at the start.

Is there a Florida state tax or withholding on the sale?

Short answer: Florida has no personal income tax, so an individual seller pays no state income tax on the gain. We found no Florida rule that adds state withholding on foreign sellers.

• Individuals. The Florida Department of Revenue says Florida does not have a personal income tax.
• Companies. Florida has a corporate income tax of 5.5%, which can apply to a corporation's gain.
• State withholding. Some states make the buyer withhold state tax from nonresident sellers. We found no such rule in Florida.
• Stamp tax. The seller pays Florida's documentary stamp tax on the deed: $0.70 per $100 of the price, or $0.60 per $100 for a home or condo in Miami-Dade.

Your home country may also tax the gain. A tax treaty between the US and your country can change the result, so ask a tax adviser in both countries.

What does FIRPTA look like on a real sale?

Short answer: on a $600,000 condo, the buyer holds $90,000, or $60,000 if the buyer will live in it. A withholding certificate can bring it close to the seller's real tax.

Example: a foreign individual bought a Miami condo for $450,000 and sells it for $600,000.

• Buyer is an investor or a company: 15% of $600,000 = $90,000 withheld.
• Buyer is a family that will live in the condo: 10% of $600,000 = $60,000 withheld.
• With a withholding certificate: suppose the seller's tax adviser estimates the real tax at $20,000 (an example, not a tax calculation). If the IRS agrees, the buyer withholds about $20,000 instead of $90,000.

Two other cases:

• A $280,000 condo bought by a person who will live in it: no withholding.
• A $1,200,000 condo: 15% ($180,000), even if the buyer will live in it.

The seller still files a US tax return, Form 1040-NR, and pays the real tax or gets back the extra.

What should the seller do, step by step?

Short answer: plan before you list, apply for the ITIN and the certificate right after the contract, and file your US return the next year.

1. Confirm whether you are a foreign person for US tax.
2. Gather your closing statement from the purchase, receipts for improvements and your selling costs.
3. Ask a tax adviser to estimate your real tax on the sale.
4. Tell the buyer in the contract that you are a foreign person.
5. Apply for an ITIN and a withholding certificate as soon as the contract is signed.
6. At closing, check the withheld amount on the closing statement.
7. Get copies of Forms 8288 and 8288-A from the buyer or the closing agent.
8. File Form 1040-NR the next year and attach copy B of Form 8288-A.