FIRPTA Withholding: What Foreign Sellers of Miami Real Estate Need to Know

Last verified: July 2, 2026 against IRS FIRPTA guidance and current withholding rates.

FIRPTA (Foreign Investment in Real Property Tax Act, 1980) requires buyers to withhold 15% of the gross sale price when purchasing real estate from a foreign national. The withholding is remitted to the IRS within 20 days of closing. Miami sees more FIRPTA transactions than any other US city because of the international buyer base, with Canadians, Argentines, Colombians, Brazilians, French nationals, and British nationals among the top seller nationalities (see my Canadian buyers guide, French buyers guide, British buyers guide, and Russian buyers guide for country-specific FIRPTA planning). If you are selling Miami real estate as a non-US person, you need to plan for FIRPTA before you list, not after you go to contract.

What Triggers FIRPTA

Any disposition (sale, exchange, gift, liquidation) of a US real property interest by a foreign person. Foreign person means non-US citizen, non-US resident, foreign corporation, or foreign partnership. Single-member LLCs owned by foreign persons are treated as foreign for FIRPTA. US residency for FIRPTA means substantial presence test or green card.

The 15% Withholding Amount

Standard withholding is 15% of the gross sale price. Not net profit, gross. On a $2M sale, that is $300,000 withheld regardless of whether you actually owe $300,000 in US tax. Reduced withholding rates apply in limited cases: 10% if the buyer will use the property as a personal residence and the sale is between $300,001 and $1,000,000; 0% if under $300,000 and personal residence. Most Miami luxury sales get the full 15%.

How to Reduce or Reclaim FIRPTA Withholding

Three paths. (1) Withholding Certificate (Form 8288-B): file with IRS before closing requesting reduced withholding based on actual expected tax. Takes 90 days. If approved, escrow can hold a reduced amount. (2) File 1040-NR after closing to reconcile actual tax owed against the 15% withheld; overpayment is refunded. Typical refund timeline: 6-18 months. (3) Apply for withholding reduction mid-transaction with CPA documentation. Requires buyer cooperation.

Which reclaim path fits you

The real decision is timing. Form 8288-B stops the cash from ever leaving your side of the table but adds a 90-day wait before closing. The 1040-NR route lets you close on schedule but ties up the full 15% with the IRS for the better part of a year. Here is how I frame it for sellers.

A worked example: a $5M Miami sale

Say you bought a Brickell condo for $3.2M and sell for $5M. The buyer withholds 15% of the gross price at closing: $750,000 to the IRS, regardless of your actual gain. Your real gain is $1.8M, and long-term capital-gains tax on that is roughly $360,000. So about $390,000 of the $750,000 was over-withheld. If you filed Form 8288-B before closing, escrow could have held closer to the $360,000 you actually owe. If you did not, you file 1040-NR after closing and wait 6-18 months for the ~$390,000 refund. On a sale this size, the 90-day 8288-B wait is almost always worth avoiding a year with $390,000 stuck at the IRS.

Common Mistakes

• Sellers who don't know FIRPTA applies until closing and are shocked by the 15% hit
• LLCs owned by non-residents who assumed US entity status exempts them (it doesn't for single-member LLCs)
• Failing to file 1040-NR in the year of sale, losing the refund
• Choosing a CPA unfamiliar with FIRPTA; standard US CPAs often miss the filing window

Pre-Sale Planning for Foreign Sellers

Three steps I walk clients through. First, engage a CPA who specializes in foreign-seller US filings 90-120 days before listing. Second, run tax projections to estimate actual US tax (often much less than 15%). Third, decide whether to file Form 8288-B for reduced withholding or accept 15% and file 1040-NR for refund. For sales under $3M, 1040-NR is usually simpler. For sales over $5M, Form 8288-B is usually worth the 90-day wait.

FIRPTA vs Estate Tax: Don't Confuse Them

Foreign sellers mix these up constantly, and they are completely different. FIRPTA is a withholding on the SALE of US property while you are alive: 15% of the gross price, reconciled against your actual capital-gains tax. US estate tax is what hits when a foreign owner DIES holding US property: non-US persons get only a $60,000 exemption (versus roughly $14M for US citizens) and the estate is taxed up to 40% above that. A Colombian who owns a $5M Brickell condo outright and passes away can face a seven-figure US estate-tax bill their family never saw coming. That is a planning problem you solve at PURCHASE, through entity or treaty structuring, not at sale. If you are buying rather than selling, read my foreign-national buyer guide and LLC structuring guide for how to handle the estate-tax side before you close.

"FIRPTA is mechanics, not a tax. The actual tax you owe depends on your cost basis and holding period. Sellers who plan 90 days before listing almost always reclaim most of the withheld amount."

Planning to sell your Miami property and want a FIRPTA plan? Reach out and I will route you to a CPA who handles 100+ foreign-seller filings per year. For context on how FIRPTA mechanics play out at the top of the market, see my deep-dive on where $5M+ buyers actually transact in Miami.

"When I represent a foreign seller in Miami, mapping the FIRPTA withholding is the first thing we settle before the property ever hits the market."Gerardo Gonzalez, Licensed Real Estate Agent at Compass

Key Takeaways

• FIRPTA withholds 15 percent of the gross sale price, not your profit: $750,000 held back on a $5M Miami sale, per 26 U.S.C. §1445.
• Form 8288-B, filed at least 90 days before closing, can cut the withholding down to your actual expected tax so the cash never leaves escrow.
• If you skip 8288-B, you reclaim over-withholding by filing Form 1040-NR after the sale; refunds take 6 to 18 months, per IRS FIRPTA guidance.
• Reduced rates exist only in narrow cases: 10 percent when the buyer will live in the property and the price is $300,001 to $1M, 0 percent under $300K, per IRS Publication 515. Most Miami luxury sales pay the full 15 percent.
• A single-member LLC owned by a foreign person is treated as foreign for FIRPTA; holding through the entity does not exempt the sale.

Quick Facts: FIRPTA for Miami Sellers

Frequently Asked Questions