Florida sells a lot of real estate to — and buys a lot from — international owners. When the seller is a foreign person, a federal law called FIRPTA can require withholding a chunk of the sale price for the IRS. It scares realtors and buyers because the buyer is the one legally on the hook. Handled correctly, it's routine. Handled poorly, it's a liability. Here's the plain-English version.
- FIRPTA withholds part of the sale price when the seller is a foreign person.
- The default is 15% (10% or 0% for lower-priced buyer-residence purchases).
- The buyer is the withholding agent and is legally responsible.
- A withholding certificate (Form 8288-B) can reduce it to the actual tax on the gain.
What FIRPTA is
FIRPTA (the Foreign Investment in Real Property Tax Act) makes sure the IRS can collect U.S. tax on a foreign seller's gain from selling U.S. real estate. It does that by requiring the buyer to withhold part of the sales price at closing and send it to the IRS, rather than letting the full proceeds leave the country untaxed.
How much is withheld
The amount is based on the gross sales price, not the seller's profit:
| Scenario | Withholding |
|---|---|
| Default (most transactions) | 15% of the sales price |
| Price $300,001–$1,000,000 and buyer will use it as a residence | 10% |
| Price $300,000 or less and buyer will use it as a residence (IRS use test) | 0% (exempt) |
The reduced 10% and 0% rates require the buyer (or a family member) to use the property as a residence for the required share of days — and the 0% tier still may warrant paperwork. When in doubt, the 15% default applies.
⚠️ The buyer is the withholding agent. If the tax isn't properly withheld and remitted, the IRS can come after the buyer — not the seller who already left with the proceeds.
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The paperwork and deadlines
Withheld funds are reported and remitted on IRS Forms 8288 and 8288-A, generally due within 20 days after closing. Both parties typically need U.S. taxpayer identification numbers (ITINs). A key exception: if the seller signs a non-foreign affidavit (certifying under penalty of perjury that they are not a foreign person), FIRPTA withholding generally doesn't apply — which is why establishing the seller's status early is essential.
How to reduce the withholding
Because 15% of the price is often far more than the actual tax on the gain, a foreign seller can apply for a withholding certificate (Form 8288-B) to lower the amount to the real tax due. If the application is filed before closing, the funds can be held in escrow pending the IRS's decision rather than sent immediately. Estimate the numbers with our FIRPTA withholding calculator.
How a title company handles FIRPTA
While the buyer holds the legal duty, an experienced closing agent does the heavy lifting: confirming the seller's status, calculating the correct rate, escrowing the funds, preparing and remitting the forms, and coordinating with the parties' CPAs on a withholding certificate. It's a core part of a properly run Florida closing and one reason to choose an experienced title and escrow team.
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General information, not tax or legal advice. FIRPTA is a federal tax matter with important nuances; buyers and foreign sellers should consult a qualified CPA or tax attorney. Your closing agent facilitates withholding but is not your tax advisor.
