FIRPTA in Miami-Dade: What Foreign Sellers Lose at Closing

How much is withheld when a foreign owner sells a Miami-Dade property?

Under FIRPTA, the buyer must withhold 15% of the gross sales price — not 15% of your profit — when the seller is a foreign person. The rate drops to 10% when the price is between $300,001 and $1,000,000 and the buyer is an individual who will live there, and to zero at $300,000 or less under the same residence test. The withholding is a prepayment, not the tax itself, and you can reduce it before closing by filing IRS Form 8288-B or recover the excess later by filing a U.S. return.

By Pedro Casanova | September 16, 2026

You agreed to sell for $850,000. The closing statement comes back and you're receiving $722,500.

Nobody made a mistake. That's FIRPTA — the Foreign Investment in Real Property Tax Act — and it's the single most common closing-day shock I see among international owners in this market.

Here's the part that catches people: the withholding is calculated on the gross sales price, not on your gain. Sell a Doral townhome at a loss and 15% still comes off the top. Inherit a Pinecrest house with a stepped-up basis and almost no taxable gain, and 15% still comes off the top.

That matters more in Miami-Dade than almost anywhere else in the country. Miami is the number one U.S. market for foreign home buyers, and South Florida's foreign-buyer share runs about 15% of residential dollar volume — roughly seven times the national figure. One in two Florida international sales happens in the Miami metro. Every one of those buyers eventually becomes a seller.

Run it against August 2026 county medians and the numbers get concrete fast. A condo at the $410,000 median means $61,500 withheld. A single-family home at the $680,000 median means $102,000 withheld.

That money isn't gone. But if you don't plan for it, you may not see it for a year or more — and that's usually the real problem, because sellers tend to be counting on those proceeds for the next purchase.

The three rates — and why the $300,000 line matters so much here

There are three possible outcomes, and which one you land in depends on the price and on what the buyer intends to do with the property.

• 15% — the default. This applies to any sale above $1,000,000, and to any sale where the buyer isn't an individual moving in. Investor buyer, LLC buyer, second-home buyer who won't meet the use test — 15%.
  
  
• 10% — price between $300,001 and $1,000,000, the buyer is an individual, and the buyer will use it as a residence.
  
  
• 0% — price is $300,000 or less and the buyer will use it as a residence.
  
  

The residence test is stricter than most people assume. The buyer or a member of the buyer's family must have definite plans to live there for at least 50% of the days the property is used by anyone during each of the first two 12-month periods after closing. Vacant days don't count against you — but a buyer who plans to rent it out most of the year doesn't qualify, and neither does a buyer purchasing through an entity.

That $300,000 line is a genuine cliff, not a slope. Sell at $299,000 to an owner-occupant and nothing is withheld. Sell at $301,000 to that same buyer and roughly $30,100 goes to the IRS. In a county where the median condo trades right around $410,000, a meaningful slice of the inventory sits close enough to that line that it belongs in your pricing conversation — not as a reason to underprice, but as a number you should know before you counter.

One more thing worth clearing up, because it generates a lot of unnecessary worry: "foreign person" is a tax definition, not an immigration one. Green card holders and people who meet the IRS substantial presence test are generally treated as U.S. persons and aren't subject to this at all. If you're not certain which side of that line you're on, that's a question for a CPA before you list — not a question to resolve at the closing table.

Florida itself takes nothing here. There's no state income tax, no state capital gains tax, and no state-level withholding at a Florida closing. FIRPTA is entirely federal.

The form that changes the outcome — and the deadline nobody sees coming

Here's what most sellers don't learn until it's too late: you can apply to have the withholding reduced before it ever happens.

That's IRS Form 8288-B, the application for a withholding certificate. You're asking the IRS to look at your actual expected tax — your real gain after basis, improvements, and selling costs — and authorize a smaller number than the flat 15%.

The catch is the timing. The application has to be filed on or before the transfer date. Not after closing. Not the week after you realize what happened. On or before.

When you file on time, the closing agent still holds the full amount, but the filing and remittance can be deferred until 20 days after the IRS mails its decision. The funds sit in escrow instead of going to Washington, and when the certificate comes back, the excess is released to you. The IRS aims to act within roughly 90 days, though some practitioners have reported closer to four months on 2026 filings.

Compare that to the alternative. Miss the window, and the full 15% goes to the IRS, and you recover the difference by filing a U.S. tax return for that year and waiting for a refund. That's realistically a year or more before you see the money.

Four months versus a year-plus, on six figures, for one form filed on time. That's the whole decision.

A few mechanics that trip people up:

1. You need a U.S. taxpayer ID. No SSN means you need an ITIN, which means Form W-7. The W-7 can be attached to the 8288-B and filed together. This alone can add weeks if you start late.
   
   
2. The 20-day rule is real. Absent a pending certificate application, the buyer must file Form 8288 with Forms 8288-A and remit the withheld tax within 20 days of the transfer date.
   
   
3. Don't assume a paper check still works. Under Executive Order 14247, Treasury stopped issuing paper checks on September 30, 2025 and federal payments are moving to electronic processing. The IRS still accepts checks for FIRPTA remittances for now — the Form 8288 instructions continue to list a mailing address — but the phase-out is underway and most closing agents have already moved to EFTPS. Enrollment isn't instant, so confirm early which method your closing agent uses rather than discovering it on closing day.
   
   
4. Keep the stamped Form 8288-A. The IRS stamps Copy B and returns it to you. Without it, claiming credit for the withholding on your return gets difficult.
   
   

None of this is exotic, and none of it is hard — but all of it is sequential, and it starts well before you have a contract. This is exactly the kind of thing I'd rather walk a seller through at the listing conversation than at the closing table.

If you're the buyer, you're the tax collector

This is the part that surprises people on the other side of the deal, and it deserves its own warning.

FIRPTA doesn't make the seller remit the money. It makes the buyer the withholding agent. If the withholding should have happened and didn't, the IRS can come after the buyer personally for the full amount, plus penalties and interest — and a criminal penalty of up to $10,000 under IRC 7202 for willful failure to collect and pay it over.

You bought the house. You could owe up to 15% of what you paid for it, again.

In practice the title company handles the collection and remittance at closing, and a competent closing agent will flag it early. But the legal exposure is yours, not theirs, which is why the protection matters:

• Get a proper non-foreign certification from the seller — a sworn affidavit under IRC §1445(b) that includes the seller's taxpayer ID — or a qualified substitute statement confirming the closing agent holds that affidavit.
  
  
• Don't accept a verbal assurance, and don't infer anything from where the seller lives or what accent they have. A U.S. address means nothing here. The affidavit is the protection.
  
  
• If the seller is foreign and you're claiming the 10% rate or the $300,000 exemption, be honest with yourself about the residence test. You're certifying to actual plans, and those plans get tested over two years.
  
  

If you're buying from a foreign seller and planning to hold it as a rental, that's worth reading alongside what to think through before selling or holding a Miami-Dade rental — the FIRPTA question and the carrying-cost question tend to land on the same buyer at the same time.

Frequently Asked Questions

Is FIRPTA a tax, or just a deposit?

It's a prepayment, not a separate tax. The actual tax is calculated on your gain when you file a U.S. return for the year of the sale. If the withholding exceeded what you owe — which is common, since it's computed on the gross price — the difference comes back to you as a refund.

How long does a FIRPTA refund actually take?

If you filed Form 8288-B before closing, you're generally looking at a few months rather than a year — the IRS aims to act within about 90 days, though some 2026 filings have run longer, and the buyer then has 20 days from the IRS mailing its decision to file and release the excess. If you didn't, you're waiting to file your return for that tax year and then waiting for the IRS to process the refund — realistically a year or more from closing.

Can I avoid FIRPTA by selling to a family member or for under $300,000?

The $300,000 exemption only applies if the buyer is acquiring it as a residence and meets the 50%-of-days-used test for two years. Selling below market or structuring a sale specifically to dodge the withholding invites scrutiny and doesn't change your underlying tax liability. The legitimate path to a smaller number is Form 8288-B.

What if I'm selling a Miami-Dade condo with a special assessment or a pending milestone repair?

Those reduce your net proceeds but not the withholding, because the withholding tracks the gross sales price. The two issues compound — you're absorbing the assessment and financing the IRS at the same time — which is why a seller in that position should look hard at the timing question around condo assessments before listing.

Does Florida withhold anything on top of FIRPTA?

No. Florida has no state income tax and no state capital gains tax, and there's no state-level withholding at closing. FIRPTA is purely federal. That's part of why Florida remains attractive to international owners even with this in the picture, and it's one of several costs worth understanding in full — the same way relocating owners need to understand what Miami-Dade ownership really costs beyond the mortgage.

The short version

FIRPTA rarely changes whether a sale makes sense. It changes when you get your money — and the difference between four months and fourteen comes down to one form filed before the transfer date, which means the conversation has to happen before you're under contract, not after.

If you own Miami-Dade property and you're not a U.S. person for tax purposes — or you're buying from someone who isn't — I'd rather map this out with you early than watch it surface a week before closing. I offer a free buying or selling strategy session: no pressure, just a straight conversation about where you stand and what your options are. You can grab a time here.

Bring your CPA into it too. This post explains how the mechanism works and where the deadlines fall; your specific tax position needs someone looking at your actual basis and filing history. I'm not a tax advisor or an attorney, and the goal here is to make sure you know the questions to ask while there's still time to act on the answers.

About Pedro Casanova

Pedro Casanova is a real estate broker that leads The KREN Group real estate team serving the Southeast Florida area. They specialize in helping people build wealth through real estate by helping buyers and sellers maximize their opportunity in every transaction. Connect with the team at www.thekrengroup.com.

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