FIRPTA in Miami: A Guide for Foreign Buyers & Sellers of Real Estate (2026)

Miami has long been a global hub, attracting investors and residents from every corner of the world. This international appeal is a cornerstone of our vibrant real estate market. However, for foreign nationals, selling a property in the United States involves a unique and critical tax regulation: the Foreign Investment in Real Property Tax Act of 1980, commonly known as FIRPTA.

Misunderstanding FIRPTA can delay a closing or create withholding problems for the parties. For buyers, sellers, and real estate agents involved in a transaction with a foreign seller, the practical goal is to identify the issue early, document the seller’s status, and coordinate tax or legal advice before the closing date.

What is FIRPTA?

FIRPTA is a U.S. federal law designed to ensure that foreign sellers of U.S. real estate pay their share of capital gains tax. To achieve this, the law requires the buyer of the property to act as a withholding agent for the Internal Revenue Service (IRS).

In most cases, the buyer must withhold 15% of the gross sales price of the property and remit it to the IRS within 20 days of closing. It is crucial to understand that this is not a final tax. It is a prepayment, or withholding, against the actual capital gains tax the foreign seller may owe. The seller must still file a U.S. tax return to report the sale, calculate the actual tax due, and request a refund of any overpayment.

Who is Considered a "Foreign Person" under FIRPTA?

FIRPTA applies when the seller of a U.S. real property interest is a "foreign person." This includes:

• A non-resident alien individual
• A foreign corporation, partnership, trust, or estate

It does not apply to U.S. citizens, resident aliens (Green Card holders), or domestic U.S. entities, even if they are owned by foreign individuals.

The Role of the Title Company as Withholding Agent

While the legal responsibility for the 15% withholding falls on the buyer, in practice, the title company or closing attorney almost always handles the process. They are responsible for:

1. Identifying the Seller's Status: Determining if the seller is a foreign person.
2. Calculating the Withholding: Calculating the correct 15% of the gross sales price.
3. Preparing IRS Forms: Completing and filing IRS Forms 8288 and 8288-A.
4. Remitting the Funds: Sending the withheld funds directly to the IRS on the buyer's behalf.

A title company may coordinate the closing mechanics, but FIRPTA tax questions should be reviewed with a qualified tax advisor or attorney. Buyers and sellers should ask early how forms, withholding, escrow instructions, and IRS remittance timing will be handled.

Are There Any Exemptions to the 15% Withholding?

Yes, several important exemptions exist that can reduce or eliminate the withholding requirement. The most common one in the Miami residential market is:

Personal Residence Exemption: If the buyer is acquiring the property to use as their primary residence and the sales price is $300,000 or less, the 15% withholding is waived entirely.

Important Considerations for this Exemption:

• The buyer must be an individual (not a corporation or partnership).
• The buyer must have definite plans to reside at the property for at least 50% of the time it is in use during the first two 12-month periods after the transfer.
• If the sales price is between $300,001 and $1,000,000 and the property will be used as the buyer's residence, the withholding is reduced from 15% to 10%.

Other Options: The Withholding Certificate

A foreign seller can apply to the IRS for a Withholding Certificate (using IRS Form 8288-B) to reduce or eliminate the withholding. Common reasons for the IRS to grant a certificate include:

• The seller has little or no capital gain from the sale (e.g., they are selling at a loss).
• The seller is exempt from U.S. tax under a specific tax treaty.

Applying for a withholding certificate must be done before the closing date. The title company can hold the 15% in escrow while the application is pending with the IRS.

Practical Advice for Navigating FIRPTA in Miami

• For foreign sellers: Disclose foreign status early and ask a tax advisor whether a withholding certificate or reduced withholding may be available.
• For buyers: Ask about seller status before closing and confirm whether any residence-based exception is being claimed.
• For real estate agents: Encourage clients to involve tax and legal advisors early and coordinate with the selected Miami-Dade title company or closing agent.

FIRPTA is a complex but manageable aspect of Miami real estate. Proactive communication and expert guidance are the keys to a smooth and compliant transaction for all parties involved.