FIRPTA Explained for Miami Buyers and Sellers

FIRPTA makes the buyer withhold 15 percent of the gross sale price when the seller is a foreign person, and remit it to the IRS by the 20th day after closing. It is not a tax on the buyer, but the buyer is the withholding agent and carries the liability if it is not done — which is why a Miami closing involving a foreign seller is a buyer's problem as much as a seller's.

Updated 21 August 2026Published 19 August 2026

The rate drops to 10 percent, or to zero, in narrowly defined cases. Everything else people believe about FIRPTA is usually a misreading of those two exceptions.

Who counts as a foreign person

A nonresident alien individual, a foreign corporation, foreign partnership, foreign trust or foreign estate. A US citizen is not. Nor is a lawful permanent resident, or an individual who meets the substantial presence test for the year. Holding a visa does not by itself make someone a US person for this purpose, and a seller with a Florida driver licence and a Miami address can still be a foreign person under the statute. The document that settles it is a non-foreign affidavit from the seller, signed under penalty of perjury, giving a US taxpayer identification number. No affidavit, withhold.

The three rates

Two details do most of the damage. First, "amount realized" is generally the gross sales price — not the gain, not the net after the mortgage payoff. A seller who bought at the top and is selling at a loss still has 15 percent of the full price withheld. Second, the residence exception has a real occupancy test attached: the buyer or a member of the buyer's family must plan to reside at the property for at least 50 percent of the number of days the property is used by any person during each of the first two 12-month periods after transfer. Days the property sits empty do not count against you; days it is rented out do.

For an Edgewater condo bought as a second home and rented for eight months of the year, that test fails, and the rate is 15 percent.

The 20-day clock, and the forms

The buyer files Form 8288, US Withholding Tax Return for Dispositions by Foreign Persons, and transmits the withheld tax, by the 20th day after the date of transfer. A Form 8288-A accompanies it for each person subject to withholding; the IRS stamps Copy B and returns it to the foreign seller, who needs it to claim credit for the withholding on a US return.

In practice the closing agent handles the mechanics, but the liability does not move. If the funds are not remitted, the IRS looks to the buyer for the tax, plus interest and penalties.

Form 8288-B: getting the number down before closing, not after

A seller who expects the withholding to exceed the actual tax can apply for a withholding certificate on Form 8288-B. The IRS "will normally act on an application by the 90th day after a complete application is received." That ninety-day figure is the entire ballgame.

Applied for at listing, the certificate can arrive before closing and reduce what is withheld. Applied for the week of closing, it does not — the funds go into escrow or to the IRS, and the seller waits for a refund on a filed return, which in a Miami-Dade transaction routinely means waiting past the following filing season. The money is not lost. It is simply not available for the seller's next purchase, which is usually what the seller actually needed it for.

What this looks like on a real Edgewater number

Take an $850,000 condominium and a foreign seller.

• Buyer will occupy it as a residence: 10 percent, $85,000 withheld.
• Buyer is acquiring it to rent: 15 percent, $127,500 withheld.
• Same unit, contract price $290,000, occupying buyer: nothing withheld.

Now suppose that seller paid $700,000. The gross gain is $150,000, and $127,500 has been withheld against a liability that will be a fraction of it. Nothing improper has happened — the system is working exactly as written — but the seller has had most of a year's worth of proceeds immobilised by a form nobody filed in time.

Where these deals actually break

Almost never on the law. Two failure modes account for most of it.

Late discovery. FIRPTA surfaces at the closing table because nobody asked about the seller's tax status when the contract was written. By then the 8288-B window is gone and the seller is being asked to accept a wire that is 15 percent lighter than the one they budgeted around. Deals die here, or repricing negotiations start at the worst possible moment.

An affidavit doing work it cannot do. A buyer's affidavit of intended residence supports the 10 percent rate or the exemption, and buyers sign them casually. If the property is then rented out and the occupancy test fails, the buyer — the withholding agent — is the one exposed. Do not sign one to help a deal close if the plan is to rent the unit.

The fix is unglamorous: ask about the seller's tax status before the contract is signed, and if the answer is "foreign person," bring in a CPA who has filed 8288-B applications the same week.

Frequently asked questions

If a foreign seller is on the other side of your contract

The wider picture — transfer taxes, property tax without homestead, the federal reporting rule and estate exposure — is in my guide to buying Miami property as a foreign buyer. For a specific building, start with Edgewater. To have the tax question raised before a contract is signed rather than at the closing table, see how I work with buyers and sellers or get in touch.

General information about the Foreign Investment in Real Property Tax Act and IRS procedure, not tax or legal advice. I am a licensed real estate sales associate, not an attorney or a CPA. Verify current rates, thresholds and procedures with the IRS and retain qualified counsel for a specific transaction.