FIRPTA & Foreign Seller Guide for Miami-Dade Sellers
This FIRPTA foreign seller guide explains, in plain language, what Miami-Dade home sellers need to know about U.S. withholding rules before they list.
Miami-Dade has one of the largest international buyer and seller bases in the country, which means FIRPTA questions come up constantly in Coral Gables, Coconut Grove, and other South Florida luxury markets. This guide explains the basics of FIRPTA in plain language. It is general information, not tax or legal advice, every seller’s situation is different, and you should confirm your specific numbers with a qualified CPA, tax attorney, or closing agent before you rely on them.
What Is FIRPTA?
FIRPTA is the Foreign Investment in Real Property Tax Act. It requires a buyer (or the buyer’s closing agent, acting as withholding agent) to withhold a portion of the sales price when purchasing U.S. real estate from a foreign seller, and send that amount to the IRS. The withholding is not an additional tax, it is a prepayment toward whatever the seller’s actual U.S. tax liability turns out to be on the sale.
Typical Withholding Rates
The standard FIRPTA withholding rate is 15% of the gross sales price. There are two commonly used reduced-rate situations, both tied to the buyer’s intent to use the property as a personal residence:
- Sales price of $300,000 or less, with the buyer signing an affidavit of intent to use the property as a personal residence: withholding can be reduced to 0%.
- Sales price between $300,001 and $1,000,000, with the same personal-residence affidavit: withholding is generally reduced to 10%.
- Sales price above $1,000,000, or no personal-residence intent: withholding generally remains at 15%.
These thresholds and rates can change, and specific transactions can have additional nuances, so they should always be confirmed with a qualified tax professional at the time of your sale.
Reducing Withholding With a Withholding Certificate
If a seller’s actual tax liability on the sale will clearly be less than the standard withholding amount, a CPA or tax attorney can apply to the IRS for a Withholding Certificate (IRS Form 8288-B) before or shortly after closing. If approved, this can reduce the amount withheld to more closely match the seller’s real tax exposure, rather than tying up 15% of the gross price for months. This process takes time and should be started early, ideally as soon as the property goes under contract, not the week of closing.
How FIRPTA Affects Your Closing Timeline
FIRPTA withholding is handled at closing by the title company or closing attorney, who typically holds the withheld funds and remits them to the IRS. If a Withholding Certificate application is in progress, some closing agents will hold the funds in escrow until the IRS responds rather than remitting immediately. Either way, foreign sellers should expect closing coordination to take a bit more planning than a typical domestic transaction, and should loop in a tax professional well before the closing date.
Why This Matters for Coral Gables and Coconut Grove Sellers
Coral Gables and Coconut Grove both have significant international buyer and seller activity, driven by proximity to the University of Miami, the Brickell financial corridor, and Miami’s broader role as a hub for Latin American and international buyers. Alex works with international clients regularly and can help coordinate timing between your listing strategy and your tax professional’s FIRPTA planning, so the sale moves smoothly instead of stalling at the closing table.
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FIRPTA FAQ
Does FIRPTA apply to me if I am a U.S. citizen?
No. FIRPTA withholding applies to sellers who are foreign persons for U.S. tax purposes (non-resident aliens, foreign corporations, foreign partnerships, trusts, and estates in most cases). U.S. citizens and U.S. tax residents are not subject to FIRPTA withholding.
Is the withheld amount an extra tax I have to pay?
No. It is a withholding toward your eventual U.S. tax liability on the sale, similar to payroll withholding. You file a U.S. tax return after closing to reconcile the amount withheld against what you actually owe, and can receive a refund if too much was withheld.
Can withholding be reduced before closing?
In many cases, yes, through a Withholding Certificate (IRS Form 8288-B) filed by a CPA or tax attorney, provided there is time to process it before or shortly after closing. This should be started as early as possible in the transaction.
Who is responsible for withholding the funds?
Legally, the buyer is the withholding agent, but in practice the title company or closing attorney typically handles the mechanics of calculating, holding, and remitting the withheld funds.
Should I talk to a tax professional before listing?
Yes. If you are a foreign seller, looping in a CPA or tax attorney early, ideally before you even list, helps avoid surprises at closing and gives enough time to pursue a Withholding Certificate if it makes sense for your situation.
This page is general educational information about FIRPTA and is not tax or legal advice. Rates, thresholds, and rules can change, and every transaction has its own facts. Please confirm details with a qualified CPA, tax attorney, or your closing agent.