A large share of South Florida property is owned by people who do not live in the United States. Most of them bought without difficulty. Selling is a different exercise, because federal law inserts a step between the closing table and the seller's proceeds — and it is a step measured against the sale price, not against the profit.
The Foreign Investment in Real Property Tax Act, universally shortened to FIRPTA, requires the buyer to withhold a portion of the purchase price when the seller is a foreign person, and to remit it to the IRS. Sellers routinely discover this in the final week, after a contract is signed and after the number they expected to receive has already been spent on paper somewhere else.
None of what follows is tax or legal advice, and a real estate licensee is not the right person to give it. What a listing strategy can do is make sure the question is asked in the right month.
The Part That Surprises People
FIRPTA withholding is generally calculated on the amount realized — in most ordinary sales, the gross sales price — and not on the seller's gain.
That distinction is the whole problem. An owner who bought a Brickell unit years ago and is selling at a modest gain, or even at a loss, can still face withholding measured against the full sale price. The withheld amount is not a tax. It is a deposit against a tax liability that has not been calculated yet. The seller recovers the difference by filing a U.S. income tax return for the year of the sale and claiming credit for what was withheld.
Withholding is not what you owe. It is what is held while the IRS waits to find out what you owe. The gap between those two numbers, and how long it is held, is what planning affects.
Recovering an overpayment through a filed return can take many months. For a seller who intended to redeploy the proceeds — into a purchase abroad, into a new investment, into a family obligation on a schedule — that timing is often more disruptive than the amount.
Who Counts as a Foreign Person
This is where sellers most often assume incorrectly. The category turns on tax status, not on how long someone has owned property here, whether they have a Florida driver's license, or whether they have a U.S. bank account.
Non-resident individuals, foreign corporations, foreign partnerships, and foreign trusts and estates fall inside the framework. A U.S. citizen or resident alien does not, and typically signs a certification of non-foreign status — sworn under penalty of perjury — that relieves the buyer of the withholding obligation.
The structure the property sits in deserves particular attention. Many international owners hold South Florida real estate through a single-member LLC formed in Florida or Delaware, and assume the U.S. entity settles the question. For federal tax purposes a single-member LLC is commonly treated as disregarded, meaning the analysis looks through to its owner. A U.S.-formed entity is not automatically a U.S. person for this purpose. That determination belongs to a qualified U.S. tax adviser, and it should be made before a listing agreement is signed, not during the title company's file review.
The Rates and the Residence Exception
The IRS describes a default withholding rate of 15 percent of the amount realized, with two narrower outcomes available when the buyer will use the property as a residence:
- Amount realized above $1,000,000 — 15 percent applies, and the residence exception is not available at this level.
- Amount realized above $300,000 but not more than $1,000,000 — a reduced rate of 10 percent may apply if the buyer acquires the property for use as a residence and meets the statutory use test.
- Amount realized of $300,000 or less — withholding may not be required at all, again only if the buyer acquires the property for use as a residence under that same test.
The use test is specific: the buyer or a member of the buyer's family must have definite plans to reside at the property for at least half the days the property is used by any person during each of the first two twelve-month periods after the transfer. A buyer purchasing as a rental or a second home held for investment does not satisfy it.
Two consequences follow for a seller. First, the applicable rate depends partly on facts about the buyer — which means an offer's structure, not just its price, can move the seller's cash at closing. Second, a buyer signing an affidavit about future personal use is taking on real exposure, and buyers who understand that will sometimes decline. Neither of those is a reason to prefer one offer over another on its own, but both belong in the analysis when offers are compared.
The Withholding Certificate Route
Where the expected actual tax is meaningfully lower than the withholding — the common case for a long-held property with an ordinary gain, and the near-universal case for a sale at a loss — the IRS provides a process for applying for a withholding certificate to reduce or eliminate the amount withheld, based on the seller's maximum tax liability on the transaction.
The mechanics matter more than the concept:
- The application is made on IRS Form 8288-B, and it should be filed no later than the date of the transfer to be useful.
- A U.S. taxpayer identification number is required — for both the seller and, where relevant, the buyer. For a non-resident individual without one, obtaining an ITIN is frequently the longest item on the entire calendar and cannot be compressed at the end.
- When the application is pending at closing, the funds are generally held rather than remitted, commonly in escrow under an agreed arrangement, until the IRS responds. This does not happen automatically — it has to be negotiated into the contract and set up with the closing agent in advance.
- The IRS response is not immediate. Sellers should plan around a process measured in months, not weeks.
- Absent a certificate, the buyer's remittance and reporting obligations run on a short clock after the transfer, and the seller's path back to the excess is the annual return.
Every one of those steps is faster and cheaper to arrange in the weeks before a property is listed than in the days after a contract is signed.
What This Changes About the Listing Itself
A non-resident seller carries an administrative sequence that a local seller does not, and that sequence has a habit of colliding with the buyer's timeline. Sellers who prepare it in advance keep control of the negotiation. Sellers who discover it late end up conceding on price, on closing date, or on both, because the calendar is doing the negotiating for them.
The practical pre-listing sequence looks like this:
- Engage a U.S. tax adviser or attorney first — a CPA or attorney experienced with non-resident sellers of U.S. real property, engaged before the listing, not after the contract.
- Confirm the ownership structure on paper. Deed, entity documents, and how the entity is classified for federal tax purposes.
- Resolve the taxpayer identification number question early enough that it cannot become the critical path.
- Assemble the basis file. Original purchase documents, closing statements, and records of capital improvements, which is what any reduction analysis depends on. Owners abroad often need weeks to retrieve documents that a local owner would have in a drawer.
- Decide whether a withholding certificate application is worth pursuing, so the answer is ready when an offer arrives rather than decided under deadline.
- Build the mechanics into the contract. Escrow of withheld funds, cooperation clauses, and realistic timing are negotiated terms, not defaults.
- Coordinate the closing agent early. Title companies that handle non-resident sales routinely will have a process for this. Not all do.
An owner who is also weighing whether the property qualifies for the primary-residence exclusion should read that framework separately — the $250,000 / $500,000 capital gains exclusion operates on a different track and answers a different question. Withholding is a collection mechanism; the exclusion is a computation of what is actually owed. A seller can be subject to the first and still benefit from the second, and only a tax professional can tell you how they interact in a specific case.
Where the Buyer Comes From
The tax framework is federal and applies identically in Coral Gables and in Sunny Isles Beach. What differs by property is how efficiently the seller reaches the buyer who will pay the most for it — and for internationally held property, that buyer is frequently not domestic either.
A listing here enters the MLS ecosystem that 90,000+ South Florida agents work from daily, with syndication to 200+ global portals in 19 languages and 437+ international partner agreements across 75+ countries, alongside United Realty Group's 3,500+ agents and Florida office network. That is exposure, not a promise of price or timing — but for a seller whose most likely buyer is reading in Spanish or Portuguese, the difference between a listing that syndicates internationally and one that does not is a real one.
Our notes on how international owners should think about MLS exposure and on the Latin American buyer segment cover that side in more depth, and the Global Desk exists for owners running this in two languages and two time zones.
FAQ
Is FIRPTA a tax I pay for selling as a foreigner?
No. It is a withholding mechanism — an advance collection against a U.S. tax liability that is determined separately when a return is filed. What is withheld and what is ultimately owed are two different numbers, and the difference is reconciled with the IRS. A qualified U.S. tax professional is the person to explain how that reconciliation would work for your situation.
Can withholding be reduced?
The IRS provides an application process for a withholding certificate based on the seller's maximum tax liability on the transaction. Whether it is worth pursuing, and what the outcome would be, is a question for a CPA or tax attorney. It is worth raising early, because the process takes time and depends on documentation.
How long does it take to get the excess back?
That depends on the route — a withholding certificate resolved before or around closing, or a refund claimed on a filed U.S. return for the year of sale. Both are measured in months rather than weeks, and neither timeline is something a real estate agent can promise.
Does holding the property in a Florida LLC avoid this?
Not by itself. Entity classification for federal tax purposes is what governs, and a single-member LLC is commonly treated as disregarded — the analysis looks through to the owner. This determination should be confirmed by a qualified U.S. tax adviser before listing.
Can you handle the tax side for me?
No, and no Florida real estate licensee should offer to. Tax and legal questions belong with a CPA or attorney qualified in U.S. taxation of non-resident property owners. What we do is sequence the sale around those answers, coordinate with the closing agent, and make sure the contract terms reflect what the process actually requires.
The recurring pattern with non-resident sellers is not that the rules are unmanageable. It is that they are discovered too late to be managed — after the contract, when the only remaining levers are price and closing date. Ninety days of lead time changes almost every part of that.
If you own South Florida property from abroad and are considering a sale, a private strategy review is the right place to map the sequence, coordinate with your tax adviser, and prepare the file before the property goes public.
Request a Private Seller Strategy Review
Source and Compliance Notes
Source basis: the Foreign Investment in Real Property Tax Act framework as described in Internal Revenue Code §1445 and the IRS's published guidance on FIRPTA withholding of tax on dispositions of United States real property interests, including the 15 percent default rate, the reduced-rate and exemption conditions tied to a buyer's residential use, and the Form 8288-B withholding certificate process; Carlos Uzcategui verified professional profile; United Realty Group affiliation; MIAMI REALTORS distribution figures maintained in the HomesProfessional source library (src/data/figures.json). Federal tax rules, thresholds, and procedures are subject to change, and their application depends on facts specific to each seller and transaction. This article does not use live MLS statistics, tax computations, legal conclusions, or property-specific valuation data.
Florida Licensed Realtor® SL705771 · United Realty Group · Equal Housing Opportunity.
Information is for general informational purposes only and does not constitute legal, tax, financial, or investment advice. Carlos Uzcategui is a licensed Florida real estate professional and is not a tax adviser, attorney, or CPA; nothing here creates a professional advisory relationship on tax or legal matters. Non-resident sellers should engage a qualified U.S. tax attorney or CPA before listing. Market data and third-party information are deemed reliable but not guaranteed and are subject to change without notice.