Tax · Accounting · Advisory
FIRPTA Withholding Help for Foreign Sellers in Miami
When a foreign owner sells U.S. real estate, federal law requires the buyer to withhold a share of the price for the IRS. We help foreign sellers reduce and recover that withholding, and help buyers and closing partners get it right.
FIRPTA
Withholding When a Foreign Owner Sells U.S. Real Estate
FIRPTA, the Foreign Investment in Real Property Tax Act, requires the buyer of U.S. real estate to withhold tax from the sale price when the seller is a foreign person, and to send it to the IRS. It is a withholding on the sale, not a separate tax, and the seller reconciles it later on a U.S. tax return.
For a foreign seller, that often means a large amount of cash is held back at closing, far more than the actual tax on the gain. As an IRS Enrolled Agent and Certifying Acceptance Agent, we work to lower that withholding before closing and recover any excess afterward, so your money is not tied up longer than the law requires.
The Rules
How FIRPTA Withholding Is Calculated
The amount the buyer must withhold depends on the sale price and whether the buyer will use the property as a residence. Three tiers set by federal law decide the rate.
- General 15 Percent Rate
By default, the buyer must withhold 15 percent of the amount realized, which is generally the gross sale price, and remit it to the IRS. This is a withholding, not the final tax, and it applies whenever no exemption or reduced rate fits the sale.
- Reduced 10 Percent Rate
When the buyer will use the property as a residence, the rate drops to 10 percent if the amount realized is more than $300,000 but not more than $1,000,000.
- Residence Exemption
No FIRPTA withholding is required when the buyer signs that they will use the property as a residence and the amount realized does not exceed $300,000. The buyer's intended use and the price both have to qualify.
- Non-Foreign Status Affidavit
Withholding applies only when the seller is a foreign person. A U.S. seller can sign an affidavit of non-foreign status, sometimes called a FIRPTA affidavit, certifying they are not foreign, and the buyer then has no duty to withhold. We confirm whether that applies to your sale.
Our Process
How We Handle a FIRPTA Sale
- 1
ITIN for the Seller
A foreign seller usually needs an ITIN to file with the IRS. As a Certifying Acceptance Agent, we obtain it and verify your documents in person, so your passport stays with you.
- 2
Withholding Certificate
We file a Form 8288-B application for a withholding certificate before or at closing, asking the IRS to reduce the withholding to the actual tax expected on the sale rather than the full 15 percent.
- 3
Remittance to the IRS
When withholding is required, we coordinate the Form 8288 and Form 8288-A filing and payment so the buyer meets the deadline and the seller is credited for every dollar withheld.
- 4
Recover Any Excess
After the sale, we file the seller's Form 1040-NR to report the transaction and claim back any amount withheld above the real tax, so the excess comes home instead of sitting with the IRS.
For Buyers and Closing Partners
A Tax Partner at the Closing Table
FIRPTA is not only the seller's problem. Buyers and closing professionals carry real exposure, and we make it manageable.
- Buyers avoid personal liability
When the seller is foreign and the buyer fails to withhold, the IRS can hold the buyer liable for the tax. We make sure the right amount is withheld and remitted, so the buyer is protected.
- Certainty before closing
We tell buyers exactly what to withhold, when to remit it, and which affidavit or certificate applies, so the closing is not held up by a FIRPTA question no one can answer.
- Support for title and escrow
We work alongside your title or escrow company, handle the FIRPTA forms and the seller's ITIN, and give the closing file a clear paper trail for the withholding.
- A referral partner for realtors
Realtors with a foreign-seller listing can bring us in early, so the FIRPTA math is settled before the offer, not discovered days before closing.
Frequently Asked Questions
FIRPTA Questions, Answered
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