FIRPTA Withholding: What Happens When a Foreign Owner Sells Miami Real Estate
Armando Ramirez5 min read
The Number That Shocks Foreign Sellers at Closing
Picture a Brickell condo bought for $850,000 in 2022 and sold this year for $900,000. After a 6% commission and closing costs, the seller walks away with roughly break-even. Maybe a small loss.
The IRS still takes $135,000 at the table.
That is FIRPTA withholding, and the detail that catches almost every foreign seller off guard is this: the 15% comes off the gross sales price, not the profit. There is no gain requirement. A seller can lose money on a Miami property and still watch six figures get wired to the Treasury before they see a dollar of their own proceeds.
Why FIRPTA Withholding Hits Miami Harder Than Anywhere Else
Most U.S. accountants will handle one or two FIRPTA closings in a career. In Miami it is a Tuesday.
South Florida’s foreign buyer share, measured as a percentage of residential dollar volume, was 15% in 2025, seven times the national figure of 2% and more than three times the Florida figure of 5%. International buyers purchased $4.4 billion in South Florida residential property in that reporting period, and Miami-Dade accounted for 73% of those transactions. Global buyers accounted for 52% of new construction, pre-construction, and condo conversion sales over a recent 22-month stretch.
Every one of those purchases is a future FIRPTA closing. The buyers of 2019 are the sellers of 2026.
FIRPTA Withholding Rates: What Comes Out and When
The rate depends on the price and on what the buyer plans to do with the property. Not on the seller’s gain.
| Sale price (amount realized) | Buyer will use it as a residence | Withholding rate |
|---|---|---|
| $300,000 or less | Yes | 0% |
| $300,001 to $1,000,000 | Yes | 10% |
| Over $1,000,000 | Yes | 15% |
| Any amount | No | 15% |
The residence exceptions require that the buyer be an individual and that the buyer or a family member plan to live at the property for at least half the days it is used during each of the first two 12-month periods after the transfer. Vacant days do not count against that test. A buyer who signs the affidavit and then lists the unit on a short-term rental platform — the same seven-day average-stay activity covered in our short-term rental tax strategy guide — has a problem.
On a $558,700 sale, which is roughly the median price paid by international buyers in the Miami market, the difference between the 10% and 15% tiers is about $28,000 of cash tied up. The affidavit is worth chasing.
Three Ways to Reduce or Eliminate FIRPTA Withholding
- Prove the seller is not foreign. If the seller can sign a certification of non-foreign status under penalty of perjury, withholding stops there. Green card holders and anyone meeting the substantial presence test are U.S. persons for this purpose, even with a foreign passport. This is the cleanest exit and the most commonly missed one.
- Use the residence exceptions above. These live or die on the buyer’s affidavit, which means they get negotiated in the contract, not at the closing table.
- Apply for a withholding certificate on Form 8288-B. This is the real tool. The seller asks the IRS to reduce withholding to the actual expected tax — which, for an owner who front-loaded deductions through a cost segregation study during ownership, has to account for the recapture that comes due on the sale. On the break-even condo above, the actual federal tax is close to zero, so the certificate can cut a $135,000 withholding down to a fraction of that.
The catch is timing. The application has to be filed on or before the closing date, and the IRS generally takes about 90 days to process a complete submission. File it by closing and the funds sit in escrow instead of going to the Treasury. File it a week late and the money is gone until the tax return is processed.
The seller also needs an ITIN to apply, and to file a U.S. return afterward. Starting that process the week of closing is how a three-month problem becomes a fifteen-month one.
The Buyer Is the One the IRS Comes After
Here is the part that surprises Miami buyers: FIRPTA makes the buyer the withholding agent. Not the title company. Not the broker.
The clock runs fast:
- Day 0: Closing.
- Day 20: Forms 8288 and 8288-A are due with the withheld funds.
- Day 21: Penalties and interest begin, and a buyer who failed to withhold is personally liable for the tax the seller owed.
A buyer who takes a seller’s word that “I’m not really foreign” and skips the paperwork can end up writing the check twice. Ask for the certification in writing, every time, on every deal. The cost of getting it is a signature. The cost of skipping it can be 15% of the purchase price.
Plan FIRPTA Withholding Before the Contract Is Signed
Almost every expensive FIRPTA outcome traces back to the same mistake: nobody looked at it until the closing package landed. By then the affidavit is unavailable, the certificate window has closed, and the only remaining option is to overpay the IRS and wait a year for the refund.
Handled early, FIRPTA withholding on a Miami property is a form and a deadline. Handled late, it is a six-figure interest-free loan to the federal government.
If you are selling South Florida property as a foreign owner, or buying from one, book a free consultation with OliRam Advisors before the contract is executed. We will map the withholding, file the certificate application in time, and keep your proceeds where they belong.