FIRPTA: selling as a foreign owner
The withholding is 15% of the amount realised† — of the sale price, not of the profit. That single distinction is why sellers who made little or no gain, or who are selling at a loss, still find a substantial sum withheld at closing. It is a prepayment against tax, not the tax itself.
Florida has the largest concentration of foreign-owned residential property in the country, and FIRPTA applies to the seller’s status rather than to where they live now. Plenty of people discover it applies to them at the closing table — including long-term Florida residents who are not US citizens or green card holders, and estates of foreign owners.
The rates, and how to fall into the lower ones
| Sale price | Withholding | Condition |
|---|---|---|
| At or below $300,000† | None | Buyer must meet the residence condition |
| Above $300,000† up to $1,000,000† | 10%† | Buyer must meet the residence condition |
| Above $1,000,000† | 15% of the amount realised† | No reduction available on price alone |
Both reductions depend on the buyer, not the seller: the individual buyer must intend to reside in the property for at least half the days it is used in each of the first two twelve-month periods after transfer†. So an investor buyer, or a buyer purchasing through an entity, does not unlock them — which makes it a term worth establishing during negotiation rather than discovering at closing.
The route that actually reduces it
Form 8288-B† is an application to the IRS to withhold based on your actual anticipated tax liability rather than a flat percentage of the gross price. On a sale with modest gain — or a loss — that is the difference between a large sum tied up for many months and a small one, or none.
This is the deadline that decides the outcome, and it is the one people miss. Deciding after closing that too much was withheld leaves you waiting for a refund through a tax return cycle instead. If you are a foreign seller, the certificate application is a conversation to have when the property is listed, not when the closing date is set.
Who is affected
- Non-resident individuals, regardless of how long they have owned the property.
- Foreign corporations, partnerships, trusts and estates.
- People who live in Florida but are neither US citizens nor lawful permanent residents, depending on their tax residency status.
- Estates of foreign owners, which is a common and poorly anticipated case.
Determining status is a tax question rather than an immigration one, and getting it wrong in either direction is expensive. A seller who is not foreign for these purposes provides a certification to that effect; a buyer who accepts one they should have questioned can end up liable for the withholding themselves.
What buyers need to know
- The obligation sits with the buyer. If withholding was required and not made, the IRS can look to the buyer for it — which is why closing agents handle this carefully and why an assurance from the seller is not sufficient.
- The residence condition is a statement about your intentions, and it is not a formality. Do not sign it to help a seller reduce their withholding if it is not true.
- It affects timing. A withholding certificate application can shape the closing process, so establish early whether one is being made.
How it sits alongside the other closing costs
FIRPTA is separate from, and additional to, the ordinary Florida costs — documentary stamp tax at $0.70 per $100† on the price, and the promulgated title premium at $5.75 per $1,000† on the first $100,000. It is also not a Florida tax at all: it is federal, and it would apply identically in any state.
What to do, in order
- Establish status early, with a tax professional, before listing.
- Work out the likely actual gain, because that is what determines whether a certificate is worth applying for.
- Apply for the certificate before closing if the withholding would substantially exceed the real liability.
- Tell the closing agent early. They handle the remittance and the forms, and they cannot retrofit a certificate application.
- File the return. Withholding is a prepayment — any excess comes back through the tax return, and only if you file it.
Related
Common questions
What is FIRPTA withholding?
A federal requirement to withhold a percentage of the sale price when the seller is a foreign person. It is 15% of the amount realised — of the price, not the profit — and it is a prepayment against tax rather than the tax itself.
Can FIRPTA withholding be reduced?
Yes, in two ways. The rate drops to 10% between $300,000 and $1,000,000, and to zero at or below $300,000, where the individual buyer meets the residence condition. Separately, Form 8288-B applies to withhold based on actual anticipated liability.
When must I apply for a withholding certificate?
Before or on the closing date. Deciding afterwards that too much was withheld leaves you waiting for a refund through a tax return cycle instead, which is the mistake that costs foreign sellers most.
Who is responsible if FIRPTA withholding is not made?
The buyer. That is why closing agents handle it carefully and why a seller’s assurance that they are not foreign is not sufficient on its own.
Does FIRPTA apply if I sell at a loss?
Withholding is still required, because it is calculated on the sale price rather than the gain. That is exactly the situation a Form 8288-B withholding certificate exists to address, and it must be applied for before closing.
FIRPTA is federal tax law administered by the IRS and applies identically in every state. Whether a seller is a foreign person for these purposes is a tax question — take professional advice before listing rather than at closing. Nothing here is tax advice.