What Is FIRPTA, and What Happens When a Foreign Owner Sells Florida Property?

Updated August 10, 2026

Short answer: When a foreign person sells Florida real estate, the Foreign Investment in Real Property Tax Act—commonly called FIRPTA—generally requires the buyer to withhold part of the seller’s amount realized and send it to the IRS.

The standard withholding rate is generally 15% of the amount realized, which is usually close to the gross sales price—not 15% of the seller’s profit.

The amount withheld is not necessarily the seller’s final tax. It is an advance payment held against the seller’s actual U.S. income-tax liability. The seller must normally file a U.S. tax return to calculate the gain, claim credit for the withholding, pay any additional tax, or request a refund.

A foreign seller whose actual tax will be substantially less than the required withholding may be able to apply for an IRS withholding certificate before closing.

General educational information only—not legal, tax, accounting, immigration, title, or investment advice. FIRPTA treatment depends on the seller’s tax status, ownership structure, property use, gain, depreciation, treaty eligibility, and transaction documents. Foreign owners should work with an international tax professional and the closing or title company well before listing or selling the property.

What does FIRPTA do?

FIRPTA allows the United States to tax foreign persons on gain from the disposition of U.S. real-property interests.

It also creates a collection system. Instead of relying only on a foreign seller to file and pay tax after leaving the United States, the law generally makes the buyer responsible for withholding part of the transaction proceeds.

In a typical direct real-estate sale:

• The foreign owner is the transferor or seller
• The buyer is the transferee and withholding agent
• Part of the amount realized is withheld at closing
• The buyer reports and sends the required amount to the IRS
• The seller later reports the sale on the appropriate U.S. tax return
• The withholding is credited against the seller’s actual tax

The IRS explains the general requirements on its FIRPTA withholding page.

Is FIRPTA withholding the seller’s final tax?

Not necessarily.

FIRPTA withholding and the seller’s final income tax are two different calculations.

The withholding calculation is generally based on the seller’s amount realized, without first subtracting:

• Original purchase price
• Mortgage payoff
• Capital improvements
• Real-estate commission
• Title or settlement fees
• Attorney fees
• Depreciation
• Other selling expenses

The final income-tax calculation generally considers the seller’s adjusted basis, selling expenses, taxable gain, depreciation, property use, holding period, available exclusions, and other relevant facts.

This means the amount withheld can be:

• More than the seller’s final tax
• Approximately equal to the final tax
• Less than the final tax
• Required even when the property is sold at a loss

The seller generally receives credit for the withholding after filing the required U.S. return.

Who is considered a foreign seller?

For FIRPTA purposes, a foreign person can include:

• A nonresident alien individual
• A foreign corporation that has not made an applicable election to be treated as domestic
• A foreign partnership
• A foreign trust
• A foreign estate
• Certain other foreign owners or interest holders

A person is not classified solely by passport or citizenship.

A non-U.S. citizen may be treated as a U.S. resident alien for federal tax purposes by meeting the green-card test, substantial-presence test, or another applicable rule. A resident alien generally is not treated as a foreign person for ordinary FIRPTA withholding.

The seller’s immigration status, federal tax residency, Florida residency, and citizenship should not be assumed to be identical. The seller’s status should be confirmed for the year and date of the transfer. The IRS provides current guidance on determining an individual’s federal tax-residency status.

Does owning through an LLC prevent FIRPTA withholding?

Not automatically.

The result depends on the LLC’s federal tax classification and ownership.

A single-member U.S. LLC may be disregarded for federal tax purposes unless it elects another classification. When the LLC is disregarded, the foreign owner may still be treated as the seller for federal tax purposes.

A multi-member LLC is generally treated as a partnership unless it elects another classification. Partnerships and corporations can have separate withholding, reporting, and tax rules.

Ownership through a:

• Florida LLC
• Foreign company
• Partnership
• Corporation
• Trust
• Estate
• Nominee arrangement

should be reviewed before the property is listed. The name shown on the deed does not by itself establish the complete federal tax treatment.

What types of transfers can be covered?

FIRPTA can apply to more than a conventional cash sale of a house or condominium.

A disposition may include:

• A traditional sale
• An exchange
• An installment sale
• Certain gifts or below-market transfers
• A transfer to or from an entity
• A transfer involving a trust
• A foreclosure or deed in lieu
• A distribution by a corporation, partnership, trust, or estate
• A sale of certain interests in a U.S. real-property-holding corporation
• Other transactions in which the owner gives up a U.S. real-property interest

A transfer should not be assumed exempt merely because no ordinary sales contract is used or the parties are related.

What is the standard FIRPTA withholding rate?

The standard rate for a direct sale by a foreign person is generally 15% of the amount realized.

The amount realized generally includes:

• Cash paid or to be paid
• Fair market value of other property transferred
• Liabilities assumed by the buyer
• Debt to which the property remains subject

For an ordinary arm’s-length sale, the amount realized is often close to the gross contract price.

The mortgage balance does not ordinarily reduce the withholding base merely because the loan will be paid from the seller’s proceeds.

How can withholding affect the seller’s cash at closing?

Suppose a foreign owner sells a Florida property for $700,000 to an investor.

A simplified withholding calculation could be:

• Sales price: $700,000
• Standard FIRPTA withholding rate: 15%
• Amount withheld: $105,000

Now suppose the property also has a $450,000 mortgage payoff:

• Sales price: $700,000
• Mortgage payoff: $450,000
• FIRPTA withholding: $105,000
• Remaining before commissions and other closing costs: $145,000

The withholding is not calculated only on the seller’s $250,000 of apparent equity.

If the mortgage, withholding, commissions, taxes, and closing charges exceed the available proceeds, the seller could be required to bring money to closing unless reduced withholding or another valid exception is arranged.

This is why FIRPTA should be reviewed before accepting an offer—not during the final days before closing.

Are there reduced rates for certain residential purchases?

Yes.

When an individual buyer acquires the property for use as a residence, the general framework is:

The buyer or a member of the buyer’s family must have definite plans to reside at the property for at least 50% of the days the property is used by any person during each of the first two 12-month periods after the transfer. Days when the property is vacant are not counted.

The IRS describes the exception in its FIRPTA withholding instructions and exceptions from FIRPTA withholding.

Does the seller’s use of the home determine the residential exception?

No.

This particular FIRPTA exception is based on the buyer’s intended use after closing, not whether the property was the seller’s primary residence.

These are separate questions:

• Will the buyer use the property as a qualifying residence?
• Did the seller use the property as a main home and qualify for a home-sale gain exclusion?

A seller cannot claim the buyer-residence exception merely because the seller lived in the home.

Likewise, a buyer’s qualifying residential use may reduce or eliminate withholding even when the foreign seller used the property as a rental.

The buyer should understand that improperly claiming the residence exception can expose the buyer to the withholding tax, interest, and penalties.

What if the seller is not actually a foreign person?

FIRPTA withholding may generally be avoided when the seller provides a valid certification, under penalties of perjury, that the seller is not a foreign person.

The certification generally includes:

• Seller’s name
• U.S. taxpayer-identification number
• Home address or business address
• A statement that the seller is not a foreign person
• Signature under penalties of perjury

The certification may be provided through a qualified substitute, such as an eligible closing attorney or title company responsible for the closing.

A buyer cannot safely rely on a certification that the buyer or relevant agent knows is false. The classification and documentation should be handled through the closing professionals.

Who is responsible for withholding?

In most direct sales, the buyer is the legal withholding agent.

A title company, closing attorney, accountant, or other professional may prepare the forms and manage the funds, but the federal withholding obligation generally belongs to the buyer.

If the seller is foreign and the buyer fails to withhold properly, the buyer can be held responsible for:

• The tax that should have been withheld
• Interest
• Penalties
• Filing failures

This is why title companies routinely ask sellers to complete FIRPTA affidavits or certifications.

The buyer should not rely only on an informal statement that the seller is “American,” “lives in Florida,” has a U.S. driver’s license, owns a Florida LLC, or has a U.S. bank account.

What forms are used?

The primary forms in a conventional FIRPTA closing are:

Form 8288

The buyer or other withholding agent uses Form 8288 to report and transmit the FIRPTA withholding.

Form 8288-A

Form 8288-A identifies the foreign seller, property, amount realized, and withholding attributed to that seller.

A separate Form 8288-A may be required for each foreign transferor.

The IRS generally stamps Copy B and sends it to the foreign seller when the form is properly completed, including the seller’s U.S. taxpayer-identification number. The seller uses the stamped Form 8288-A to claim credit for the withholding.

The IRS provides current information about Forms 8288 and 8288-A.

When must the buyer send the withholding to the IRS?

The buyer generally must file Form 8288, attach the required Forms 8288-A, and transmit the withheld tax by the 20th day after the date of transfer.

The deadline can change when a timely application for a withholding certificate is pending.

The purchase contract, closing company, buyer, and seller should identify responsibility for preparing and submitting the forms. The seller should obtain copies of the completed documents and confirmation that the funds were transmitted.

What is a FIRPTA withholding certificate?

A withholding certificate is an IRS determination that can reduce or eliminate the amount that would otherwise be withheld.

A certificate may be appropriate when:

• Standard withholding exceeds the seller’s estimated maximum tax liability
• The property is being sold at a loss
• The seller has a small taxable gain
• The seller qualifies for a tax exclusion
• A nonrecognition provision may apply
• The parties provide acceptable security for the tax
• Another qualifying circumstance exists

Form 8288-B is commonly used to request the certificate.

The IRS describes withholding certificates as appropriate when standard withholding would exceed the seller’s maximum tax liability or when reduced withholding would not jeopardize collection of the tax. Review the IRS withholding-certificate guidance.

Why might a foreign seller apply for reduced withholding?

Consider a simplified example:

• Sales price: $700,000
• Original and adjusted basis: $650,000
• Qualifying selling expenses: $42,000
• Estimated taxable gain before other adjustments: $8,000
• Standard FIRPTA withholding: $105,000

Withholding $105,000 could be far more than the seller’s estimated federal tax on the transaction.

The seller may be able to submit Form 8288-B requesting withholding based on the estimated maximum tax liability instead of the standard percentage of the gross amount realized.

Approval is not automatic. The application must be complete, documented, and supported by an accurate tax calculation.

When should Form 8288-B be submitted?

The application must generally be submitted to the IRS on or before the date of transfer to receive the special pending-application treatment.

A foreign seller should begin preparing well before closing because the application may require:

• Signed purchase contract
• Seller and buyer information
• Taxpayer-identification numbers
• Property description
• Purchase and sale dates
• Original basis
• Closing costs
• Capital-improvement documentation
• Depreciation schedules
• Estimated selling expenses
• Estimated gain or loss
• Estimated maximum tax liability
• Explanation of the requested reduction
• Prior withholding-certificate information
• Supporting tax returns or schedules

The IRS states that it normally acts within 90 days after receiving all information necessary to make a proper determination. An incomplete application can delay the decision. Review the current Form 8288-B instructions.

What happens if the certificate is still pending at closing?

If a qualifying Form 8288-B application was submitted on or before the transfer date and remains pending:

• The required amount is still withheld from the seller at closing
• The withheld funds generally remain controlled by the withholding agent
• The funds are not immediately sent to the IRS
• The parties wait for the IRS decision
• The approved amount is remitted after the IRS issues the certificate
• Any excess held may then be released to the seller

The withholding agent generally must report and pay the approved amount by the 20th day after the IRS mails the withholding certificate or notice of denial.

The purchase contract and escrow instructions should address who will hold the money and how it will be released.

Does the seller need an ITIN?

A foreign individual who is not eligible for a Social Security number may need an Individual Taxpayer Identification Number.

An ITIN may be necessary to:

• Submit Form 8288-B
• Receive a properly processed Form 8288-A
• File Form 1040-NR
• Claim credit for FIRPTA withholding
• Request a refund
• Report the sale and taxable gain

A foreign seller who needs both an ITIN and a withholding certificate may be able to submit Form W-7 with Form 8288-B under the IRS procedure for foreign property sellers.

An ITIN is only a federal tax-processing number. It does not create immigration status, authorize employment, establish Florida residency, or provide homestead eligibility. Review the IRS ITIN guidance for foreign property buyers and sellers.

How is the seller’s actual gain calculated?

A simplified calculation may begin with:

• Gross sales price
• Minus qualifying selling expenses
• Equals net amount realized for calculating gain
• Minus adjusted tax basis
• Equals gain or loss before other tax adjustments

The adjusted basis may begin with the original purchase price and certain acquisition costs.

It may then be increased by qualifying capital improvements, such as:

• Building additions
• Major remodeling
• New roof
• New HVAC system
• Permanent structural improvements
• Certain assessments
• Other capitalized costs

The basis may be reduced by:

• Depreciation allowed or allowable
• Certain casualty-loss adjustments
• Prior tax credits
• Insurance reimbursements
• Other required adjustments

The IRS explains that improvements generally increase basis while depreciation generally reduces it in Publication 551, Basis of Assets.

What records should the seller keep?

A foreign owner should retain:

• Original purchase contract
• Final purchase closing statement
• Recorded deed
• Title policy
• Loan documents
• Survey
• Original property allocation between land and building
• Improvement invoices
• Contractor receipts
• Permits
• Proof of payment
• Depreciation schedules
• Rental tax returns
• Property-management statements
• Insurance and casualty records
• Prior appraisal information
• Sales contract
• Listing agreement
• Real-estate commission statement
• Final sales closing statement
• Forms 8288 and 8288-A
• Form 8288-B and the IRS decision
• U.S. and home-country tax returns

Bank statements alone may not establish whether an expenditure was a deductible repair, personal expense, or capital improvement.

Missing records can cause the seller to lose legitimate basis adjustments and pay tax on a larger reported gain.

How does depreciation affect the sale?

A rental owner may have claimed depreciation while owning the property.

Depreciation generally reduces the property’s adjusted basis, which can increase the taxable gain when the property is sold.

The tax calculation may include:

• Capital gain
• Unrecaptured Section 1250 gain
• Ordinary income from certain depreciation-related items
• Gain or loss on furniture, appliances, or equipment
• Passive losses that may become available upon a qualifying disposition
• Other entity or activity-level adjustments

The IRS notes that unrecaptured Section 1250 gain can be taxed at a maximum federal rate of 25%. Other portions of the gain may be taxed differently. Review IRS Topic 409 on capital gains and losses.

Failing to claim allowable depreciation during the rental years does not necessarily protect the seller from a basis reduction at sale.

Can a foreign seller qualify for the main-home gain exclusion?

Possibly.

A nonresident alien is not automatically prohibited from qualifying for the federal main-home gain exclusion.

In general, an individual may qualify to exclude up to $250,000 of gain when the applicable ownership, use, and other requirements are met. A larger exclusion may be available to certain married taxpayers who qualify to file jointly and satisfy the applicable tests.

The general ownership and use requirements usually involve owning and using the property as a main home for at least two years during the five-year period ending on the sale date.

The result can be affected by:

• Rental use
• Depreciation
• Periods of nonqualified use
• Prior home-sale exclusions
• Marriage and filing status
• Tax residency
• Partial ownership
• Disability, employment, health, or unforeseen circumstances
• Dates of ownership and physical occupancy

The IRS confirms that resident and nonresident aliens may be eligible for exclusions when the conditions are satisfied in Publication 519, U.S. Tax Guide for Aliens.

Qualifying for an income-tax exclusion does not automatically stop FIRPTA withholding at closing. The seller may still need a withholding certificate or another valid exception.

What if the property is sold at a loss?

Standard FIRPTA withholding can still apply.

The closing agent generally does not eliminate withholding simply because the seller states that the sale will produce no profit.

A seller expecting a loss should consider applying for a withholding certificate using documented:

• Purchase price
• Acquisition costs
• Capital improvements
• Depreciation
• Selling expenses
• Contract price
• Estimated tax calculation

Without an approved certificate or another valid exception, the seller may have to wait until filing the U.S. tax return to recover excess withholding.

How does the seller receive a refund?

An individual nonresident alien generally reports the sale on Form 1040-NR and attaches the properly processed Form 8288-A to claim credit for the amount withheld.

The return determines:

• Actual gain or loss
• Applicable deductions
• Depreciation-related gain
• Capital-gain treatment
• Available exclusions
• Total federal tax
• Credit for FIRPTA withholding
• Additional tax due or refund requested

The IRS instructions state that gains and losses from a nonresident alien’s disposition of U.S. real-property interests are taxed as effectively connected with a U.S. trade or business. Review the Form 1040-NR instructions.

The seller should not assume the entire withheld amount will be refunded. The IRS first applies it against the seller’s actual tax and other qualifying federal liabilities.

Is an early refund possible?

Sometimes.

When the withheld funds were already sent to the IRS and the IRS later approves a withholding certificate reducing or eliminating the required amount, the seller may be able to request an early refund before the normal tax return becomes due.

The request generally requires:

• Approved withholding certificate
• Seller’s taxpayer-identification number
• Properly processed Form 8288-A
• Signed refund request or appropriate form
• Supporting documentation

An early refund is a specialized procedure and should be handled by the seller’s tax professional.

What if there are multiple owners?

When property is owned by foreign and nonforeign sellers, the withholding generally applies to the amount realized allocated to the foreign transferor.

Allocation can depend on:

• Legal ownership percentages
• Capital contributions
• Marital ownership
• Entity interests
• Transaction documents
• Applicable federal rules

The parties cannot simply assign all proceeds to the U.S. owner to avoid withholding.

Each foreign owner may need:

• A taxpayer-identification number
• A separate Form 8288-A
• An individual gain calculation
• A separate tax return or filing position
• A separate withholding-certificate analysis

Joint ownership involving spouses with different citizenship or tax status should be reviewed early.

What happens with an installment sale?

An installment sale can create a serious cash-flow problem.

Under the general FIRPTA rule, the buyer may be required to withhold based on the full amount realized at the time of the first installment payment, even though the seller will receive the sales price over several years.

The required withholding could exceed the cash received at closing.

A seller considering an installment sale should discuss a withholding certificate and the tax consequences before signing the contract. The seller should not assume FIRPTA withholding will automatically be spread over the installment-payment schedule.

Can a 1031 exchange avoid FIRPTA?

A properly structured Section 1031 exchange may defer qualifying gain on investment or business real property, but it does not automatically eliminate FIRPTA procedures.

The transaction may still require:

• Advance tax planning
• A qualified intermediary
• Strict identification and completion deadlines
• Proper nonrecognition notices
• FIRPTA documentation
• A withholding certificate
• Taxpayer-identification numbers
• Confirmation that both properties and the owner qualify

A personal-use vacation home does not automatically qualify for Section 1031 treatment.

The exchange must be structured before the seller receives or controls the sale proceeds. A seller should not sign an ordinary sales contract and assume the transaction can be converted into a valid exchange after closing.

Does a tax treaty eliminate FIRPTA?

Usually not automatically.

A tax treaty may affect:

• Tax residency
• Available credits
• Recognition of certain income
• Estate or gift-tax treatment
• Home-country taxation
• Reporting requirements

However, U.S. tax treaties commonly preserve the United States’ right to tax gain from U.S. real estate.

A treaty claim may require specific forms, disclosures, and analysis. The fact that the seller lives in a treaty country does not by itself eliminate FIRPTA withholding.

Does Florida impose an additional state income tax on the gain?

Florida does not currently impose personal state income tax on individuals.

A foreign individual may still owe:

• U.S. federal income tax
• Income tax in the owner’s home country
• Florida corporate income tax if a taxable corporate structure is involved
• Florida documentary stamp tax or other transaction charges
• Outstanding property, rental, sales, or tourist taxes
• Entity filing fees
• Tax-adviser and return-preparation costs

The absence of Florida personal income tax does not eliminate federal FIRPTA withholding.

What Florida transfer tax may appear at closing?

Florida imposes documentary stamp tax on deeds transferring Florida real property.

In Pinellas County and every Florida county except Miami-Dade, the current rate is $0.70 for each $100, or portion of $100, of consideration.

For a $700,000 transfer, the basic calculation would be:

• $700,000 ÷ $100 = 7,000 taxable units
• 7,000 × $0.70 = $4,900

The contract and local closing practices generally determine how the expense is allocated between the parties, although Florida law can impose liability more broadly. Review the Florida Department of Revenue’s documentary stamp-tax guidance.

Documentary stamp tax and FIRPTA withholding are separate charges.

What other amounts can reduce the seller’s closing proceeds?

A foreign seller’s closing statement may also include:

• Mortgage payoff
• Real-estate commission
• Documentary stamp tax
• Owner’s title insurance
• Settlement or closing fee
• Attorney fee
• Recording charges
• Property-tax proration
• Association estoppel or transfer charges
• Municipal lien search
• Permit or code-enforcement amounts
• Utility balances
• Repair credits
• Buyer concessions
• Home-warranty cost
• Wire-transfer fees
• FIRPTA withholding

These are not all taxes.

The seller should request an estimated closing statement early and confirm whether sufficient proceeds will remain after all deductions.

Can the seller simply leave the United States after closing?

Leaving the United States does not eliminate the seller’s tax or filing obligations.

The seller may still need to:

• Receive the stamped Form 8288-A
• Maintain a current mailing address with the IRS
• Obtain or renew an ITIN
• File Form 1040-NR or another federal return
• Report rental income through the sale date
• Calculate depreciation
• Pay additional tax
• Request a refund
• Report the transaction in the seller’s home country
• Maintain access to U.S. bank and closing records
• Respond to IRS correspondence

The seller should arrange with the accountant how records and tax documents will be delivered after closing.

What should a foreign seller do before listing the property?

Before listing, the owner should confirm:

• Identity of the legal and beneficial owner
• Federal tax classification of each owner
• Whether each seller is foreign for FIRPTA purposes
• U.S. taxpayer-identification numbers
• Original and adjusted tax basis
• Depreciation claimed or allowable
• Capital-improvement records
• Personal and rental use
• Estimated selling expenses
• Estimated federal gain and tax
• Possible main-home exclusion
• Possible Section 1031 exchange
• Need for Form 8288-B
• Home-country tax obligations
• Mortgage and lien payoffs
• Estimated net proceeds
• Which title company can handle a foreign-seller transaction

This review allows the seller to price and negotiate with a realistic understanding of the cash that may be available at closing.

What should happen after an offer is accepted?

After the property is under contract, the seller should promptly:

• Give the contract to the international tax professional
• Notify the title company that the seller may be foreign
• Confirm buyer and seller taxpayer-identification numbers
• Update the gain and maximum-tax calculation
• Decide whether to submit Form 8288-B
• Provide supporting records
• Review the buyer-residence exception if relevant
• Confirm who will hold and remit the withholding
• Review the estimated closing statement
• Confirm the Form 8288 and 8288-A procedure
• Arrange for delivery of the stamped Form 8288-A
• Plan for the required U.S. tax return

Waiting until the week of closing may be too late to prevent unnecessary withholding.

How can a Mandarin-speaking Realtor help?

A Realtor cannot determine the seller’s federal tax residency, calculate the seller’s taxable gain, prepare Form 8288-B, select an ownership structure, or provide legal or tax advice.

A knowledgeable Realtor can still help by:

• Identifying potential FIRPTA issues early
• Asking how the property is titled
• Encouraging the seller to consult qualified professionals
• Coordinating with the title company
• Providing the purchase and listing documents
• Gathering property information
• Helping organize improvement and transaction records
• Requesting an estimated closing statement
• Coordinating contract deadlines
• Helping the seller understand the practical closing timeline
• Maintaining communication among the seller, buyer, title company, attorney, and accountant

Rachael Han-Ong assists Mandarin- and English-speaking property owners and buyers interested in Palm Harbor, Clearwater, Dunedin, Safety Harbor, Tarpon Springs, and surrounding Pinellas County communities.

When a foreign owner is preparing to sell, the Han-Ong Team can help manage the real-estate side of the transaction while the owner’s tax, legal, and title professionals handle FIRPTA and other specialized requirements.

The bottom line

FIRPTA withholding is not necessarily the foreign seller’s final tax bill.

The standard rule generally requires withholding of 15% of the amount realized, even when:

• The seller has little equity
• The property is sold at a loss
• The seller’s taxable gain is small
• A mortgage will consume much of the proceeds
• The seller intends to file a U.S. tax return later

A residential-buyer exception may reduce or eliminate withholding in certain transactions of $1 million or less. A withholding certificate may also reduce withholding when the standard amount exceeds the seller’s estimated maximum tax liability.

The strongest approach is to begin before the property is listed:

• Confirm the seller’s tax status
• Reconstruct the adjusted basis
• Locate depreciation and improvement records
• Estimate the actual tax
• Determine whether Form 8288-B is appropriate
• Select a title company familiar with foreign-seller transactions
• Plan for the U.S. tax return and any refund

Early planning can prevent a foreign seller from discovering at closing that a large portion of the proceeds must be held or sent to the IRS.