Under FIRPTA, the buyer must withhold 15 percent of the gross sale price when the seller is a foreign person, not 15 percent of the profit. The rate drops to 10 percent on a residence priced above $300,000 but not more than $1 million, and to zero at $300,000 or less when the buyer will live there.
Withholding is on the price, not the profit
The Foreign Investment in Real Property Tax Act of 1980, codified at Internal Revenue Code section 1445, exists because the United States wanted a way to collect tax on real estate gains from sellers it might not otherwise reach. The mechanism it chose is blunt: the buyer becomes the withholding agent and holds back a percentage of the amount realized, which for a normal condo sale means the gross contract price.
That distinction is the single most expensive misunderstanding in a cross-border Miami closing. A seller who bought a Brickell unit for $900,000 and sells it for $1,000,000 has a $100,000 gain, but the standard withholding is calculated on the $1,000,000. On a property that has barely appreciated, or one sold at a loss, the amount withheld can exceed the entire tax actually owed by a wide margin.
FIRPTA is federal, so it applies identically in Miami, Naples or New York. Florida adds no state-level analog, because the state has no personal income tax and therefore no state withholding to layer on top. That is a genuine advantage relative to states that impose their own withholding on non-resident sellers.
The three rates, and what moves you between them
There are three outcomes, and the amount realized plus the buyer's intended use determine which one applies.
The default is 15 percent of the amount realized. This is what applies to most sales, including every sale to a buyer who intends to rent the unit out or hold it as a second home without meeting the residence test below.
The reduced rate is 10 percent, available when the amount realized is more than $300,000 but not more than $1,000,000, and the buyer will use the property as a residence. Both conditions have to hold.
The exemption is zero withholding, available when the amount realized is $300,000 or less and the buyer acquires the property for use as a residence. Given Miami condo pricing, this tier is more relevant to smaller inland units than to the waterfront market, but it does apply where it applies.
The residence test the buyer has to actually meet
Both the 10 percent rate and the full exemption depend on a specific test, and it is stricter than a casual statement of intent. The buyer, or a member of the buyer's family, must have definite plans to reside at the property for at least half of the days the property is used by any person during each of the first two twelve-month periods after the transfer.
That is the buyer's representation to make, not the seller's, and the buyer carries the exposure if it turns out to be untrue. A buyer who signs the affidavit and then lists the unit on a short-term rental platform has a problem, because liability for under-withholding falls on the withholding agent.
For a seller, the practical consequence is that you cannot count on the reduced rate. It depends entirely on a buyer whose plans you do not control, and those plans can change between contract and closing.
The withholding certificate that unfreezes your money
The remedy for over-withholding is Form 8288-B, an application for a withholding certificate. The seller asks the IRS to reduce the withholding to the tax actually expected on the gain, and if the IRS agrees, the excess is released rather than sitting with the Treasury until a return is filed the following year.
Timing is the whole game. The application has to be submitted on or before the closing date. Done properly, the buyer still withholds, but the funds are typically held in escrow pending the IRS response rather than remitted, and the IRS has historically taken on the order of ninety days to act. Filed late, the money goes to the Treasury and the only route back is the tax return.
A seller also needs a US taxpayer identification number. A foreign individual without a Social Security number applies for an ITIN, and that process is slow enough that starting it after a contract is signed is often already behind schedule.
The paperwork calendar around closing day
Three documents drive the sequence. Forms 8288 and 8288-A are how the buyer reports and remits the withholding, and they are due within twenty days of the transfer date. Form 8288-A is stamped by the IRS and returned to the seller as evidence of the credit, which is what the seller later applies against the actual tax.
Where the seller is not foreign, none of this is triggered, but the buyer still wants proof. That proof is a non-foreign affidavit, a signed certification of non-foreign status from the seller, which relieves the buyer of the withholding obligation. Any Miami closing with an international seller name on it will see one requested.
Entity ownership adds a layer worth naming. A condo held through a US limited liability company that is disregarded for tax purposes is looked through to its owner, so foreign ownership of the LLC does not avoid FIRPTA. Ownership structures are exactly the situation where the general rules stop being sufficient.
Getting the difference back
Withholding is a deposit against tax, not the tax. The seller files a US return for the year of the sale, reports the gain, computes the actual liability, credits the amount withheld, and claims a refund of the excess.
This works, but it is slow, and it is why the withholding certificate matters so much. The difference between a certificate obtained before closing and a refund claimed on a return filed the following spring can be a year or more of a large sum being unavailable.
For market context on what Miami units are pricing at, our report is at /market-stats, and current inventory sits at /condos-for-sale. Our companion guide at /blog/international-buyers-guide-miami-condos covers the purchase side of cross-border ownership, and neighborhood profiles for the areas where international ownership concentrates are at /neighborhoods/brickell and /neighborhoods/sunny-isles-beach.
Questions foreign sellers ask about FIRPTA
Is FIRPTA a tax?
No. It is a withholding mechanism that secures payment of the tax you may owe on the gain. The actual tax is determined when you file a US return for the year of the sale, and the amount withheld is credited against it, with any excess refunded.
Is the 15 percent taken from my profit?
No, and this is the most common misunderstanding. It is calculated on the amount realized, which for a straightforward sale is the gross contract price. On a property with little appreciation, the withholding can be several times the tax actually owed.
Can I avoid the wait for a refund?
Apply for a withholding certificate on Form 8288-B on or before the closing date. If granted, withholding is reduced to the expected tax and the balance is released, rather than sitting with the Treasury until you file. Applications made after closing do not achieve this.
Do I need a US tax identification number?
Yes. You need a TIN to claim the credit and file the return, and a foreign individual without a Social Security number obtains an ITIN. Start that process early, because it can take longer than the transaction itself.
Does Florida withhold anything on top?
No. Florida imposes no personal income tax and no state-level withholding on non-resident sellers, so FIRPTA is the only withholding in a Florida closing. Sellers comparing Miami with markets in states that do impose one are comparing different totals.
What our Miami data can and cannot tell you
We do not currently operate an MLS feed for the Miami market, so listing figures on our Miami pages are clearly labeled samples rather than live inventory, and our building and market numbers are periodic research estimates rather than live comps.
We are a research and listings platform, not a brokerage, and this is general information rather than legal or tax advice. A cross-border sale belongs with a US CPA or tax attorney experienced in FIRPTA before the contract is signed, not after closing. We do not list on the MLS, negotiate offers or close transactions. When you want a specific building reviewed ahead of a sale, we introduce you to a licensed partner agent.
Written by
Miami Condo HQ
Miami Condo Specialists
Miami Condo HQ is a Miami condo platform — in-depth profiles for the condo buildings we track across Miami, for-sale and for-rent listings, building profiles and Miami market research, and honest, pressure-free guidance for buyers, sellers and investors across South Florida.
