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FIRPTA — U.S. Foreign Investment in Real Property Tax Act

Miami real estate buyer & seller guide · Updated October 20, 2026

FIRPTA in Miami: what foreign property sellers and buyers should know

FIRPTA—the Foreign Investment in Real Property Tax Act—can affect the sale of a Miami condo, waterfront home or other U.S. real estate when the seller is a foreign person for U.S. tax purposes. The buyer generally has the responsibility to withhold and remit a portion of the amount realized, unless a qualifying exception or IRS withholding certificate applies.

Plan before closing. FIRPTA withholding is a payment toward the seller’s potential federal tax liability. The amount withheld is not necessarily the final tax owed. Ask your U.S. CPA and closing attorney to review the seller’s tax status, ownership structure and documentation early.
Miami skyline, books and house keys illustrating the FIRPTA property buyer and seller guide
Miami skyline by P. Hughes, CC BY-SA 4.0; adapted composite.

FIRPTA withholding rates: 0%, 10% and 15%

The general rate for a direct property purchase from a foreign seller is 15% of the amount realized, usually the gross sales price rather than the seller’s profit or net closing proceeds. The amount realized can also include other property exchanged and liabilities assumed. A mortgage payoff does not by itself reduce the withholding base.

  • 0% residence exception: amount realized of $300,000 or less, with an individual buyer meeting the IRS residence-use requirements.
  • 10% reduced residence rate: amount realized above $300,000 and up to $1 million, when the residence-use requirements are satisfied.
  • 15% general rate: amount realized above $1 million, or a purchase that does not qualify for the residence exception or reduced rate, unless another applicable rule changes the result.

Residence use means that the buyer or a family member has definite plans to reside at the property for at least 50% of the days it is used by anyone during each of the first two 12-month periods after transfer. Vacant days are excluded. A buyer’s citizenship alone does not determine this exception.

Illustrative Miami property sale examples

A qualifying $800,000 residence purchase from a foreign seller generally requires $80,000 of withholding at 10%. A $2 million condo sale generally requires $300,000 at 15%, even if the seller’s taxable gain is much smaller. These examples assume a single foreign seller and no other exception or withholding certificate.

FIRPTA closing checklist for buyers and sellers

  1. Confirm tax status. Foreign status is a tax determination. Do not rely on nationality, a mailing address or immigration terminology alone. Obtain the appropriate certification of nonforeign status when applicable.
  2. Review the title holder. An LLC does not automatically eliminate FIRPTA. A disregarded single-member LLC generally requires looking through to its owner; corporations, partnerships, trusts and distributions can involve different rules.
  3. Gather the file. Have the contract, taxpayer identification numbers, purchase records, improvement receipts, depreciation records and estimated closing statement ready for your tax professional.
  4. Evaluate Form 8288-B early. A withholding certificate may authorize reduced or zero withholding when justified. A loss on the sale does not automatically allow the buyer to skip withholding.
  5. Calendar reporting and payment. Forms 8288 and 8288-A and the payment are generally due by the 20th day after transfer. A timely pending certificate application can change the reporting and payment deadline, but does not eliminate the obligation to withhold at closing.
  6. Keep records after closing. The seller generally files the appropriate U.S. income tax return to report the transaction and claim the withholding credit. Any refund depends on the actual liability and IRS processing.

Can a withholding certificate reduce the amount?

Yes. The buyer, buyer’s agent or seller may request an IRS withholding certificate. The IRS generally acts within 90 days after receiving a complete application, although timing is not guaranteed. When an application is submitted before or on the transfer date and remains pending, reporting and payment are generally due within 20 days after the IRS mails its certificate or denial. Coordinate custody of the withheld funds and all deadlines with the closing attorney and CPA.

FIRPTA questions & answers

Who is responsible if FIRPTA is missed?

The buyer is generally the withholding agent and may be liable for required withholding, interest and penalties. Using a title company does not automatically remove that responsibility.

Does buying Miami real estate trigger a FIRPTA tax for a foreign buyer?

FIRPTA generally concerns a foreign person’s disposition of U.S. real property. A foreign buyer may nevertheless have withholding duties when purchasing from a foreign seller and should plan for a future sale.

Is the 15% withholding my final capital gains tax?

No. Your tax professional calculates the actual federal tax liability on the appropriate return. Withholding is credited against that liability; excess withholding may be refundable.

Does a domestic LLC automatically qualify as a U.S. seller?

No. Federal tax classification and ownership matter. A disregarded LLC’s owner is generally treated as the transferor for FIRPTA purposes. Have a professional review the structure.

How can I avoid FIRPTA if I own the property through a U.S. LLC?

A U.S. LLC does not automatically avoid FIRPTA. The LLC’s federal tax classification and its owners’ U.S. tax status determine the treatment. A U.S. address, state registration or EIN alone does not establish an exemption.

  • Single-member LLC with a U.S. owner: If the LLC is disregarded for federal tax purposes and its owner is a U.S. citizen or U.S. tax resident, buyer-level FIRPTA withholding generally does not apply when the owner provides a valid certification of nonforeign status.
  • Single-member LLC with a foreign owner: For a disregarded LLC, the IRS generally treats the owner as the seller. FIRPTA withholding can therefore apply even though the LLC was formed in the United States.
  • U.S. LLC taxed as a partnership: A valid domestic-partnership certification can generally remove the buyer’s section 1445 withholding requirement on the property sale. However, the partnership may have separate section 1446 withholding obligations on effectively connected taxable income allocated to foreign partners. This does not make the gain tax-free.
  • U.S. LLC taxed as a domestic C corporation: A valid nonforeign-status certification generally avoids buyer-level FIRPTA withholding on the corporation’s property sale. Corporate income tax and possible withholding on distributions to foreign shareholders remain. Corporate taxation is not automatically the lowest-tax option.

For a foreign owner of an existing disregarded LLC: A Form 8288-B application may support an IRS withholding certificate reducing or eliminating the closing holdback when the expected federal tax liability justifies it. An application alone does not authorize releasing required withholding. A sale at a loss does not automatically eliminate withholding.

Before changing ownership or electing corporate taxation, have a U.S. CPA or tax attorney compare the transfer consequences, sale taxes, distribution taxes and filing requirements. Avoiding withholding does not eliminate tax actually owed.

Sources: IRS Form 8288 instructions, IRS partnership withholding and IRS Form 8288-B.

Official IRS resources

FIRPTA overview · Form 8288 instructions and residence thresholds · Reporting and payment deadlines · Withholding certificates

Explore our South Florida buyer’s guide and 1031 exchange overview as you prepare for your transaction.

Planning a Miami property purchase or sale?

Contact Dan Maza, PA, for real estate guidance and coordination with your chosen closing and tax professionals.

Call 305 571-6319

Educational overview only; not individualized legal or tax advice. Special rules may apply to joint ownership, entities, trusts, distributions and other transfers. Confirm the applicable treatment with your U.S. tax professional and closing attorney.
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