If you're a foreign owner selling Miami real estate, FIRPTA quietly takes 15% of the gross sale price at closing. Here's how the law works in 2026 — and the five strategies that legally reduce it.
Key Takeaways
- FIRPTA withholds 15% of the gross sale price from non-US-resident sellers of US real estate at closing — not 15% of the gain.
- Personal-residence sales under $300K to a buyer using it as a primary residence are fully exempt from FIRPTA withholding.
- A pre-closing Withholding Certificate from the IRS can reduce or eliminate the 15% before the wire is sent.
If you're a foreign national who owns Miami real estate and you're thinking about selling, there's a four-letter acronym you need to understand before you sign the listing agreement: FIRPTA.
The Foreign Investment in Real Property Tax Act of 1980 requires the buyer (or, in practice, the closing agent) to withhold 15% of the gross sale price from any non-US-resident seller and send it directly to the IRS at closing. Not 15% of your profit. Fifteen percent of the entire sale price.
On a $2 million condo, that's $300,000 wired to the IRS while you're still sitting at the closing table. On a $5 million waterfront home, that's $750,000. On a $10 million Sunny Isles trophy, that's $1.5 million.
I've watched international sellers — from Buenos Aires, São Paulo, Bogotá, Mexico City, London, Toronto, and all over Europe — show up to a Miami closing with no idea this was about to happen. The shock is brutal. And it's almost always avoidable, or at least dramatically reducible, with the right planning before you list.
This is the honest 2026 FIRPTA playbook for international sellers in Miami. Five strategies that legally cut, defer, or eliminate the withholding — and the three mistakes that quietly cost foreign sellers six figures every year.
What FIRPTA Actually Is (And Why It Exists)
FIRPTA was passed in 1980 to make sure foreign owners of US real estate actually paid US tax on their gains when they sold. Before FIRPTA, foreign sellers could close a deal, wire the proceeds back to their home country, and the IRS often never got their cut.
The fix was to make the buyer responsible for collecting the tax at closing. Today, FIRPTA works like this:
- If the seller is a "foreign person" (not a US citizen or US resident for tax purposes)
- And the property is US real estate
- Then 15% of the gross sale price gets withheld at closing
- The withheld amount is sent to the IRS on Form 8288 within 20 days
- The seller files a US tax return the following spring to either get a refund (if the actual tax owed is less than the withholding) or pay the balance (if it's more)
Important: FIRPTA is a withholding mechanism, not the actual tax. Your actual federal capital gains tax on the sale might only be $50,000. But FIRPTA still withholds 15% of the gross price up front, and you have to wait until you file the next year's return to recover the over-withholding. That's a meaningful cash-flow drag.
- Miami Market Snapshot — June 2026:
- Estimated share of Miami luxury condo closings involving FIRPTA-applicable foreign sellers: approximately 28-32% across $1M+ closings
- Median FIRPTA withholding on a typical $1.5M Miami condo sale: $225,000 at closing
- Average IRS refund processing time for FIRPTA over-withholding: 6-12 months after filing
- Approximate share of foreign sellers who claim a Withholding Certificate to reduce FIRPTA: under 15%, per practitioner estimates
The Five Strategies That Reduce FIRPTA
Strategy 1: The Withholding Certificate (Form 8288-B)
This is the most powerful and most underused tool. Before closing, you (or your tax advisor) submit IRS Form 8288-B requesting a reduced or zero withholding based on the actual tax you'll owe on the sale.
If the IRS issues a Withholding Certificate before closing, the buyer only has to withhold the amount specified in the certificate — which can be zero if you can prove no taxable gain.
The timeline: IRS typically takes 90 days to process Form 8288-B. So this strategy requires planning. If you're listing your property and you know FIRPTA applies, your team should start the 8288-B process the moment you have a contract — and ideally even before.
Strategy 2: The $300,000 Personal-Residence Exemption
If the sale price is $300,000 or less AND the buyer is purchasing the property as their personal residence (signed affidavit at closing), the entire FIRPTA withholding is waived. This rarely applies to Miami luxury inventory but does apply to many condos in Doral, Hialeah, Aventura, and inland Miami-Dade.
Reduced 10% Withholding For Sales Between $300K-$1M
There's a less-known middle tier: if the sale price is between $300,000 and $1,000,000 and the buyer is purchasing as their personal residence, the FIRPTA withholding drops from 15% to 10%. On a $900K sale, that's a $45,000 difference at closing.
Strategy 3: Convert to a US-Owned LLC Before You Sell
If you own the property in your personal name as a foreign individual, FIRPTA hits at full force. But if you've structured ownership through a US LLC that has elected to be treated as a US corporation for tax purposes (and meets certain ongoing requirements), the FIRPTA mechanism changes.
This is a strategy that has to be in place BEFORE the sale — converting structure after you have a contract is too late and can trigger other tax problems. But for foreign owners building a Miami portfolio, structuring correctly from day one is one of the highest-leverage tax moves you can make. I covered the broader structuring question in my Miami Real Estate LLC playbook.
Strategy 4: The 1031 Exchange (Yes, Foreign Sellers Can Use It)
Most foreign sellers don't realize they can do a Section 1031 like-kind exchange just like US sellers. If you sell a Miami property and reinvest the proceeds into another US real estate investment within the IRS timelines (45 days to identify, 180 days to close), you can defer the capital gains tax entirely.
FIRPTA withholding still applies at the initial sale — but the Withholding Certificate process (Strategy 1) can reduce it to nearly zero if you can document the 1031 exchange in advance.
For foreign investors who want to keep their Miami real estate portfolio growing without giving 30%+ to the US government, this is the cleanest path. I broke down the mechanics in my deep dive on Miami 1031 exchanges.
Strategy 5: Time The Sale Around US Tax Residency
If you spend enough time in the US to become a "US resident for tax purposes" (substantial presence test — typically 183+ days over a three-year weighted calculation), FIRPTA does not apply to you in that year.
This is a sophisticated play and has major collateral tax implications (you'd potentially become subject to US worldwide income tax). It's not for everyone. But for some foreign sellers who are already spending significant time in Miami or are considering applying for residency, aligning the sale year with US tax residency status can completely eliminate FIRPTA — at the cost of broader US tax exposure.
This requires a tax attorney who specializes in cross-border planning. Don't try this without one.
The Three Mistakes That Cost Foreign Sellers Six Figures
- 1Not knowing FIRPTA exists until the closing table. Sellers from Latin America and Europe routinely arrive at closing and learn that 15% of their wire is going to the IRS. By then, none of the five strategies above are available. Plan minimum 4-6 months before listing.
- 1Using the wrong closing agent. Some Miami title companies handle one or two FIRPTA closings a year. Others handle hundreds. The difference matters — experienced closing teams know how to structure the Withholding Certificate timing, how to confirm buyer affidavits for the personal-residence exemption, and how to coordinate with the seller's home-country tax advisor. Ask before you choose.
- 1Forgetting state tax. Florida has no state income tax, which helps, but if the sale involves a 1031 exchange or you're a US tax resident in a state that does have income tax (a snowbird with a NY or NJ domicile, for example), state-level withholding and tax may also apply on top of FIRPTA.
What This Means For International Buyers (Right Now)
If you're a foreign national considering buying Miami real estate today, structure the purchase with the exit in mind. The way you take title — personal name, LLC, foreign corporation, or trust — determines how FIRPTA will hit you when you sell. The decision is easy to make at closing. It's expensive to fix later.
For foreign sellers already holding Miami property and thinking about selling in the next 12-24 months, the conversation should start now. The Withholding Certificate process alone needs a 90-day runway. Layered with 1031 planning or LLC restructuring, you should be talking to your CPA at least 6 months before you list.
If you're an international owner with a Miami property and you're not sure how FIRPTA will apply to you, call me before you call your lawyer. A 30-minute conversation can save you a six-figure surprise at closing.
Frequently Asked Questions
Q: Does FIRPTA apply if I'm a US green card holder selling Miami property? A: No. Permanent residents (green card holders) are treated as US residents for tax purposes and are not subject to FIRPTA withholding. You still owe normal US capital gains tax on the sale — but no 15% withholding at closing.
Q: Can I get the FIRPTA money back if too much was withheld? A: Yes. You file a US federal income tax return for the year of the sale (typically Form 1040-NR for non-resident sellers), report the actual gain, and claim the FIRPTA withholding as a credit. If too much was withheld, the IRS refunds the difference — usually 6-12 months later.
Q: Does FIRPTA apply to selling a Miami condo I inherited from a foreign relative? A: Yes, if you are a foreign person at the time of sale, FIRPTA applies regardless of how you acquired the property. The stepped-up basis at death may reduce your actual tax liability, but the 15% gross-price withholding still hits at closing unless you get a Withholding Certificate.
Q: What if the buyer refuses to do the FIRPTA paperwork? A: The buyer is legally responsible — they can be personally liable to the IRS for the full 15% if it's not properly withheld. In practice, the closing agent handles it. No experienced Miami title company will close a FIRPTA-applicable transaction without proper documentation.
Whether you're buying, selling, or investing — I've got you. Partnership Realty / Partnership Realty Inc / +1 (561) 629-0358 / carloscabalerealtor.com
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Content Team · Partnership Realty Inc
+1 (305) 340-6251 · partnershiprealtyinc.com