Expect the IRS to hold back 15% of your gross sale price under FIRPTA, not your profit. That rate falls to 10% on sales between $300,001 and $1,000,000 when the buyer will live there, and to zero at $300,000 or less. Form 8288-B can reduce it before closing. Your specialist confirms the exact figure.


What FIRPTA Is and Why It Applies to You

FIRPTA stands for the Foreign Investment in Real Property Tax Act. The law requires a buyer to hold back part of the sale price when a foreign person sells U.S. real estate. The IRS collects that money upfront to guarantee the tax actually gets paid.

The rule catches many Canadian and European owners off guard at the closing table. Your buyer, not you, carries the legal duty to withhold and remit those funds. That buyer faces personal liability for the full amount after a missed step. Title companies across Palm Beach County therefore flag foreign sellers early in every transaction.

The Three FIRPTA Withholding Rates

Three rates exist, and the one you receive depends on two things. The amount realized, which is essentially your gross sale price, drives the math. Your buyer's intended use of the property decides whether a lower rate applies.

The 15% Standard Rate

Most foreign sellers face the default 15% rate. It applies to any sale above $1,000,000 and to any property the buyer will not occupy. A $600,000 condo sale sends $90,000 to the IRS at closing. That figure holds even when you owe far less in actual tax.

The 10% Residence Rate

The rate falls to 10% under one specific set of conditions. Your buyer must be an individual who intends to live in the home. The amount realized must also land between $300,001 and $1,000,000. Your buyer then signs an affidavit confirming that plan.

The occupancy test carries real weight. Your buyer or a family member must reside there more than half the days used in each of the first two years. A buyer purchasing an investment property cannot claim this reduced rate.

The 0% Exemption Under $300,000

No withholding applies when two conditions line up. The amount realized must be $300,000 or less, and your buyer must be an individual planning to reside there. The same occupancy test applies across the first two 12-month periods. This exemption is the only one that requires no advance filing with the IRS.

Why the Withholding Hits Your Sale Price, Not Your Profit

One detail surprises nearly every foreign seller, and it stings. The withholding applies to your gross sale price, not your gain. You can sell at a loss and still watch 15% leave the closing table.

Picture an $800,000 Florida condo purchased years ago for $750,000. Your actual gain is modest, yet the standard rate still holds back $120,000. The IRS keeps that money until you file a return and claim the difference. That gap between the withholding and your real tax bill is exactly why advance planning pays off.

Who Counts as a Foreign Person Under FIRPTA?

The definition reaches further than many owners expect. Your citizenship alone does not settle the question, since U.S. tax residency matters more. The IRS generally treats these parties as foreign persons.

  • Nonresident alien individuals who do not meet the substantial presence test for U.S. residency.
  • Foreign corporations, partnerships, trusts, and estates that hold U.S. real property interests.
  • Former U.S. citizens and green card holders who have given up that status.
  • Canadian snowbirds who own Florida property without qualifying as U.S. tax residents.

A green card holder or anyone meeting the substantial presence test counts as a U.S. person. Dual citizens usually sit outside FIRPTA for that same reason. Your specific status deserves professional confirmation well before you list.

How FIRPTA Applies to LLCs and Foreign Corporations

Your ownership structure changes the analysis in meaningful ways. A property held by a foreign corporation or a foreign partnership still triggers the withholding. A domestic LLC adds another layer, since the IRS looks past the entity to the owner behind it.

A single-member LLC owned by a foreign person is usually disregarded for tax purposes. The IRS then treats that foreign member as the seller, and withholding applies as normal. A genuine U.S. corporation selling its own real estate generally falls outside these rules. Your entity paperwork therefore belongs in the specialist's first review.

When Only One Owner Is a Foreign Person

Mixed ownership shows up constantly among South Florida couples and families. One spouse may hold U.S. citizenship while the other does not. FIRPTA then reaches only the foreign owner's share of the property.

The withholding gets calculated on that person's portion of the amount realized. A 50/50 deed on a $900,000 sale means the rate applies to $450,000. Each owner must be identified separately in the closing paperwork and on the withholding forms. Couples selling in Delray Beach save real money when they sort this out before listing.

Own a Florida home as a foreign national and thinking about selling in Delray Beach, West Palm Beach, or Palm Beach Gardens? We put a FIRPTA specialist on your file before the sign goes up, so paperwork never slows your closing date. Call The Mastropieri Group at (561) 544-7000.

How a Withholding Certificate Lowers the Amount Held Back

A withholding certificate is the main tool for reducing what the IRS keeps. You apply on Form 8288-B and show the IRS your actual expected tax. An approved certificate cuts the withholding to that smaller figure, and it can erase the obligation entirely.

The timing decides whether this strategy works at all. Your application must reach the IRS before closing, and processing runs around 90 days. Your closing agent then holds the funds in escrow while the review happens. A late application means the full amount goes to the IRS, and you wait on a refund instead.

Why You Need a Specialist, Not a Percentage

The rates above give you a framework, though your situation may not match any simple example. On the Discover South Florida Podcast, Larry Mastropieri was firm about how foreign sellers should handle this.

"If you're not a US citizen, we immediately connect you with people who specialize in what they call FIRPTA. These individuals walk you through everything."

Larry refuses to quote a number, even after years of these transactions. That restraint is a feature, not a gap in his knowledge.

"This isn't one of those where you just plug in a number or percentage. I don't even get into it, because I don't want to give false information."

His reasoning holds up against the actual rules. Documentation, entity structure, prior depreciation, and treaty positions all shift the outcome.

"While I have tons of experience with this and I've seen it a thousand times, you really need to talk to these people. There's a little bit of complexity there."

What the Specialist Actually Does for You

A qualified accountant handles far more than a quick calculation. They review your documentation, determine your correct status, and pursue a withholding certificate when the numbers justify it. Larry describes them as the people who give you the real answer.

"They are the professionals, they are the accountants, they specialize in this, and they will tell you exactly what you need to do."

That guidance protects you from two costly outcomes. Excess withholding ties up cash you could have kept, while a mistake can delay your closing. Sellers in Boca Raton benefit most when this work starts before the listing goes live.

Larry keeps the recommendation short and unmistakable.

"You need a specialist to help tell you that answer. That's the answer."

What Documents Your Specialist Will Request

The work begins with paperwork, since your real tax depends on documented numbers. Larry describes a thorough process that runs straight through to the closing table.

"They're going to ask for documentation. They're going to go through all this with you, and then they will be a part of the closing."

Assemble these items before your first conversation.

  • Your original purchase closing statement, which establishes the cost basis for this sale.
  • Receipts for capital improvements such as a roof, kitchen, or impact windows.
  • Prior tax returns showing any depreciation claimed while the property was rented.
  • Passport and travel records that document your days spent inside the United States.
  • Current title documents naming every owner listed on the deed.

Complete records often lower your calculated gain and the withholding that follows. Gaps in your paperwork have the opposite effect and can cost you thousands.

How the Closing Works for a Foreign Seller

The process runs on parallel tracks once you identify yourself as a foreign national. Your agent lists the property while the specialist opens the tax file. Larry starts both immediately so nothing waits.

"You tell us you're a foreign national. Great. Immediately, here's the contact. Let's start listing the property."

The title company plays a central role at the end. They independently verify your status and confirm the withholding is handled correctly.

"The title company is going to look at this and say, you're a foreign national, we need to deal with this. Who's dealing with this? Someone who specializes in it."

Your specialist coordinates directly with that title company through closing. The buyer, or the closing agent acting for them, then files Form 8288 and Form 8288-A within 20 days of the transfer. That coordination keeps a complex sale on schedule across Broward County and the rest of South Florida.

How Do You Get the Withheld Money Back?

The withholding is a prepayment, not a final tax. You recover the excess after you file a U.S. tax return for the year of the sale. The IRS stamps Copy B of Form 8288-A and mails it to you as proof.

That stamped copy becomes your credit on Form 1040-NR. Your refund equals the withheld amount minus your actual tax liability. Most sellers wait several months for that money, which is why a withholding certificate often makes more sense. An ITIN is required before you can file, so request one early.

When Should You Start the FIRPTA Process?

The calendar drives every option available to you. A certificate application needs roughly 90 days with the IRS, and that clock starts only once you apply. Begin the moment you decide to sell, well before an offer arrives.

An established team makes that early start painless. Larry keeps these relationships ready precisely because the situation comes up so often.

"We work with a number of individuals, because we do this so often that we just connect people with them, and then they work with us all together."

An early start preserves your leverage and your cash. A timely application keeps your funds in escrow with the closing agent instead of at the IRS. A late start leaves you with the full standard rate and a long wait for a refund.

Mistakes That Cost Foreign Sellers Money

A handful of avoidable errors show up again and again in these transactions. Each one either raises the amount withheld or delays your closing. Watch for these traps as you plan your sale.

  • Sellers who reveal their foreign status during closing week lose the certificate option entirely.
  • A loss on the sale never removes the withholding, since FIRPTA applies to the price.
  • Delayed ITIN applications block your refund filing and stretch the wait by many months.
  • Lost improvement receipts inflate your taxable gain and the tax you ultimately owe.
  • General accountants without cross-border experience often overlook treaty positions and basis adjustments.

Each mistake traces back to the same root cause, which is starting too late. Owners across West Palm Beach avoid all five by involving the right professionals from day one.

FIRPTA Checklist for Foreign Sellers in Florida

  • Confirm your tax status early, since green card holders and substantial presence residents fall outside FIRPTA.
  • Expect 15% of the gross sale price unless the residence exception or a certificate applies.
  • Apply for a withholding certificate on Form 8288-B at least 90 days before closing.
  • Request an ITIN promptly, as the IRS requires one before you can file for a refund.
  • Gather purchase documents, improvement receipts, and closing statements that prove your cost basis.
  • Ask your buyer whether they plan to occupy the home, since that answer can cut the rate.

This page explains general rules and is not tax advice. A cross-border accountant should confirm how FIRPTA applies to your sale.

Keep More of Your Proceeds and Close Without Delays

FIRPTA is a process, not an obstacle, once the right people handle it from the start. We bring in proven cross-border specialists, launch your listing in parallel, and keep your accountant and title company aligned. Early coordination is what protects both your cash and your closing date. Reach out to The Mastropieri Group, Realtors®. Call (561) 544-7000. Share your citizenship and your property address, and we will connect you with the right specialist today.

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