FIRPTA Withholding in Miami: A 2026 Seller Guide

Last updated: July 2026

When a foreign person sells U.S. real estate, federal law requires the buyer to hold back a portion of the sale price and send it to the IRS. This is FIRPTA withholding, and in Miami it comes up constantly because the metro absorbs a large share of foreign-owned property. The default rate is 15% of the gross sales price, not 15% of the profit [1]. That distinction matters: the withholding is calculated on the full amount realized, so a seller can owe far more up front than the actual tax on the gain. Two structural reliefs exist. A buyer who will use the property as a residence and pays $300,000 or less triggers no withholding, and a residence sale between $300,001 and $1,000,000 can drop the rate to 10% [2]. Beyond that, a seller can apply for a withholding certificate on Form 8288-B to reduce the held amount to the actual tax due. This post walks through how FIRPTA withholding Miami transactions run, who is responsible, and how to avoid tying up cash you do not owe.

What FIRPTA is, in plain terms

FIRPTA stands for the Foreign Investment in Real Property Tax Act. It is a collection mechanism, not a separate tax. Because a foreign seller may leave the country before the IRS can assess and collect capital gains tax, Congress shifted the collection point to closing. The buyer withholds a set percentage of the sale price and remits it, and the seller later reconciles that amount against the real tax bill on a U.S. return.

The status that triggers FIRPTA is a tax classification, not anything about a person's background. The IRS defines a foreign person as a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. Whether withholding applies turns entirely on that tax-residency test as the IRS defines it, and this article treats it strictly as a transactional and tax question.

The rate structure: 15%, 10%, and 0%

The standard withholding rate is 15% of the amount realized, which is generally the gross sales price [1]. There is no netting for the mortgage payoff, commissions, or closing costs at the withholding stage. On a $2 million sale, that is $300,000 routed to the IRS at closing regardless of whether the seller actually gained that much.

Two reductions exist, and both depend on the buyer using the property as a residence. The buyer or a family member must have definite plans to live in the property for at least half of the days it is used during each of the first two 12-month periods after closing.

The $300,000 tier

If that residence condition is met and the sales price is $300,000 or less, no withholding is required [2]. The buyer typically signs an affidavit affirming the residence intent, and no funds are held back.

The 10% tier up to $1,000,000

If the residence condition is met and the sales price is more than $300,000 but not more than $1,000,000, the rate drops to 10% instead of 15% [2]. Above $1,000,000, the residence reduction no longer applies and the full 15% is withheld.

Much of the Miami condo and single-family inventory that foreign sellers hold sits right in and above that $1,000,000 line, so many local transactions default to the full 15%.

Who is the withholding agent

The buyer is the withholding agent [1]. This surprises people. The obligation, and the liability if withholding is missed, sits with the buyer, not the seller and not the title company. In practice the closing agent or escrow holder administers the mechanics, but the legal duty runs to the buyer. If the buyer fails to withhold when required, the IRS can pursue the buyer for the tax plus penalties and interest.

That is why buyers and their agents care about FIRPTA even though it looks like a seller issue. A buyer purchasing from a foreign seller has real exposure and should confirm the seller's status early, ideally during due diligence rather than at the closing table.

How Form 8288-B reduces the cash held

The 15% number is a collection floor, not the tax owed. When the actual tax on the gain is lower than the withheld amount, which is common, the seller has two paths to get the difference back.

The slower path is to wait: the seller files a U.S. return the following year, reports the sale, and claims the withheld amount as a credit. Refunds can take many months.

The faster path is a withholding certificate. The seller files Form 8288-B before or around closing, showing the IRS the expected actual tax on the gain. If approved, the IRS authorizes withholding at the reduced actual-tax figure rather than the full 15%. The IRS states it normally acts on a withholding certificate application within 90 days [3]. When a Form 8288-B application is pending at closing, the withheld funds are generally held in escrow rather than sent to the IRS, and the remittance clock is suspended until the IRS issues its determination.

For a foreign seller with a modest gain on a high-priced Miami property, Form 8288-B can be the difference between parking hundreds of thousands of dollars with the IRS for a year and holding only what is genuinely owed. It requires a U.S. taxpayer identification number for the seller, so that application should start early.

The forms and the 20-day clock

Three forms carry the process:

Form 8288 is the buyer's withholding tax return for the transaction.
Form 8288-A is the statement of withholding for each foreign seller. The IRS stamps it and returns a copy to the seller, who uses it to claim credit on a U.S. return.
Form 8288-B is the seller's application for a reduced withholding certificate.

The timing rule is strict. Generally the buyer must file Form 8288 and Form 8288-A and remit the withheld amount by the 20th day after the date of the sale [3]. Where a Form 8288-B application is pending, that 20-day deadline shifts to the 20th day after the IRS mails its certificate or its denial. Missing the window exposes the buyer, the party legally on the hook, to penalties and interest, so the closing agent usually calendars this immediately after recording.

Why this matters in Miami specifically

Miami carries an outsized concentration of foreign-owned real estate, which means FIRPTA touches a larger share of transactions here than in most U.S. markets. Foreign buyers purchased $4.4 billion in South Florida residential real estate in 2025, up from $3.1 billion the prior year, according to the Miami Association of Realtors [4]. Property that foreign persons buy is property that foreign persons eventually sell, and every one of those resales runs through the FIRPTA analysis.

For a seller, the practical takeaway is to model the cash flow before listing. A 15% hold on a gross Miami sales price can dwarf the actual tax on the gain, and if you need those proceeds for your next purchase, the timing of a refund or a Form 8288-B certificate becomes central to the deal. If you are weighing a sale, a grounded read on price sets the baseline for all of this; you can start with a listing valuation and see the broader process on the sell your Miami home page.

For a buyer, the takeaway is to identify the seller's tax status during due diligence, because the withholding duty and its liability are yours. Coordinate the affidavit, the certificate timeline, and the remittance with the closing agent rather than discovering the issue at signing.

FIRPTA is mechanical once you map it, but the numbers are large enough that the mechanics are worth getting right. None of this is a substitute for advice from a CPA or tax attorney who handles cross-border transactions; the point here is to know the levers before you are at the table.

Frequently asked questions

Is FIRPTA withholding based on my profit or the sale price?

The sale price. Withholding is calculated on the gross amount realized, generally 15%, not on the gain [1]. That is precisely why the actual tax is often lower than the amount withheld, and why the Form 8288-B certificate exists to reconcile the two before closing.

Can I avoid withholding entirely?

Only in defined situations. The clearest is a residence sale of $300,000 or less where the buyer meets the use-as-a-residence conditions, which carries 0% withholding [2]. A residence sale up to $1,000,000 can qualify for the reduced 10% rate. Otherwise the 15% default applies, though a withholding certificate can lower the amount actually held to the real tax.

Who is legally responsible for withholding?

The buyer is the withholding agent and bears the liability if withholding is required and not done [1]. The closing or escrow agent typically handles the paperwork, but the legal duty runs to the buyer, which is why buyers of foreign-owned Miami property should confirm seller status early.

How long does a Form 8288-B certificate take?

The IRS states it normally acts on a withholding certificate application within about 90 days [3]. Filing early matters because the seller needs a U.S. taxpayer identification number, and while the application is pending the funds are generally held in escrow rather than sent to the IRS.

Does FIRPTA depend on nationality?

No. It turns on tax status as the IRS defines a foreign person, meaning residency and entity classification for tax purposes, not nationality or any personal characteristic. It is a transactional tax rule applied uniformly to that status.

Gabriel

Sources

[1] IRS — FIRPTA withholding

[2] IRS — Exceptions from FIRPTA withholding

[3] IRS — Reporting and paying tax on U.S. real property interests

[4] Miami Association of Realtors — Miami is #1 U.S. market for foreign home buyers

Gabriel A. Moyers, PA. eXp Realty. Florida License #3407280. Equal Housing Opportunity. This article is general information as of July 2026 and is not legal, tax, or financial advice. Verify current figures against authoritative sources before acting.