If you are a foreign national selling property in Florida, FIRPTA withholding will affect your closing. Here is what it means, how much is withheld, and what exemptions may reduce or eliminate it.
South Florida is one of the most active international real estate markets in the United States. Venezuelan, Colombian, Argentine, Brazilian, and European buyers and sellers transact here every day. And for foreign nationals selling a property in Florida, one federal law applies to every transaction regardless of price, location, or nationality: FIRPTA.
If you are selling Florida real estate and you are not a U.S. citizen or permanent resident, FIRPTA withholding will affect your closing proceeds. This guide explains exactly how it works, what the current rates are in 2026, what exemptions exist, and what you should do before you list your property.
FIRPTA stands for the Foreign Investment in Real Property Tax Act. It was enacted in 1980 to ensure that foreign nationals who sell U.S. real property pay U.S. taxes on any gain realized from the sale, just as U.S. citizens are required to do. Without FIRPTA, a foreign seller could simply leave the United States after closing without paying tax on the profit, and the IRS would have limited recourse to collect.
FIRPTA solves this by making the buyer responsible for withholding a portion of the sales price at closing and remitting it to the IRS. The withheld amount acts as a prepayment toward the seller's U.S. tax obligation.
There are two standard withholding rates:
Note that the withholding is calculated on the gross sales price, not on the profit. A seller who purchased a property for $400,000 and sells it for $500,000 has a $100,000 gain, but the FIRPTA withholding on a standard transaction is $75,000 based on the $500,000 sales price, not $15,000 based on the gain.
FIRPTA applies to any seller who is a foreign person, defined as:
U.S. citizens and lawful permanent residents (green card holders) are not foreign sellers under FIRPTA. A seller who holds a visa but is not a permanent resident is generally considered a foreign person unless they qualify as a resident alien under the substantial presence test.
There are situations where FIRPTA withholding is reduced or does not apply at all:
Under FIRPTA the buyer is the withholding agent. This means the buyer bears legal responsibility for ensuring the withholding is calculated correctly and remitted to the IRS on time. If the buyer fails to withhold when required, the IRS can hold the buyer personally liable for the tax plus interest and penalties.
In practice, the closing agent or title company handles the mechanics. At closing, the withheld funds are held in escrow and the title company files IRS Form 8288 and remits the withholding within 20 days of closing. The foreign seller receives the balance of the proceeds.
Yes. FIRPTA withholding is not the final tax. It is a prepayment. After the close of the tax year in which the sale occurred, the foreign seller files a U.S. federal tax return reporting the gain. If the actual tax owed on the gain is less than the amount withheld, the seller receives a refund of the difference.
In many cases, particularly where the seller has owned the property for years and has a relatively modest gain relative to the gross sales price, the refund can be substantial. A CPA or tax advisor with U.S. international tax experience should handle the return filing.
The most important step is to consult a qualified tax advisor before listing the property, not after accepting an offer. Here is a practical checklist:
InvesTeam Realty has worked with international sellers across South Florida for over 24 years. We work alongside qualified closing agents and can refer you to tax professionals with FIRPTA experience. Contact us before you list.
Talk to an Agent →This article is for informational purposes only and does not constitute legal or tax advice. FIRPTA rules are complex and fact-specific. Consult a qualified U.S. tax advisor and real estate attorney before any transaction involving foreign ownership of U.S. real property.
If you are a foreign national selling property in Florida, FIRPTA withholding will affect your closing. Here is what it means, how much is withheld, and what exemptions may reduce or eliminate it.
South Florida is one of the most active international real estate markets in the United States. Venezuelan, Colombian, Argentine, Brazilian, and European buyers and sellers transact here every day. And for foreign nationals selling a property in Florida, one federal law applies to every transaction regardless of price, location, or nationality: FIRPTA.
If you are selling Florida real estate and you are not a U.S. citizen or permanent resident, FIRPTA withholding will affect your closing proceeds. This guide explains exactly how it works, what the current rates are in 2026, what exemptions exist, and what you should do before you list your property.
FIRPTA stands for the Foreign Investment in Real Property Tax Act. It was enacted in 1980 to ensure that foreign nationals who sell U.S. real property pay U.S. taxes on any gain realized from the sale, just as U.S. citizens are required to do. Without FIRPTA, a foreign seller could simply leave the United States after closing without paying tax on the profit, and the IRS would have limited recourse to collect.
FIRPTA solves this by making the buyer responsible for withholding a portion of the sales price at closing and remitting it to the IRS. The withheld amount acts as a prepayment toward the seller's U.S. tax obligation.
There are two standard withholding rates:
Note that the withholding is calculated on the gross sales price, not on the profit. A seller who purchased a property for $400,000 and sells it for $500,000 has a $100,000 gain, but the FIRPTA withholding on a standard transaction is $75,000 based on the $500,000 sales price, not $15,000 based on the gain.
FIRPTA applies to any seller who is a foreign person, defined as:
U.S. citizens and lawful permanent residents (green card holders) are not foreign sellers under FIRPTA. A seller who holds a visa but is not a permanent resident is generally considered a foreign person unless they qualify as a resident alien under the substantial presence test.
There are situations where FIRPTA withholding is reduced or does not apply at all:
Under FIRPTA the buyer is the withholding agent. This means the buyer bears legal responsibility for ensuring the withholding is calculated correctly and remitted to the IRS on time. If the buyer fails to withhold when required, the IRS can hold the buyer personally liable for the tax plus interest and penalties.
In practice, the closing agent or title company handles the mechanics. At closing, the withheld funds are held in escrow and the title company files IRS Form 8288 and remits the withholding within 20 days of closing. The foreign seller receives the balance of the proceeds.
Yes. FIRPTA withholding is not the final tax. It is a prepayment. After the close of the tax year in which the sale occurred, the foreign seller files a U.S. federal tax return reporting the gain. If the actual tax owed on the gain is less than the amount withheld, the seller receives a refund of the difference.
In many cases, particularly where the seller has owned the property for years and has a relatively modest gain relative to the gross sales price, the refund can be substantial. A CPA or tax advisor with U.S. international tax experience should handle the return filing.
The most important step is to consult a qualified tax advisor before listing the property, not after accepting an offer. Here is a practical checklist:
InvesTeam Realty has worked with international sellers across South Florida for over 24 years. We work alongside qualified closing agents and can refer you to tax professionals with FIRPTA experience. Contact us before you list.
Talk to an Agent →This article is for informational purposes only and does not constitute legal or tax advice. FIRPTA rules are complex and fact-specific. Consult a qualified U.S. tax advisor and real estate attorney before any transaction involving foreign ownership of U.S. real property.
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