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 or ignoring FIRPTA can lead to significant financial penalties and delay a closing. For buyers, sellers, and real estate agents involved in a transaction with a foreign seller, understanding this law is not optional—it is essential. This guide provides a clear explanation of what FIRPTA is, who it affects, and how to navigate its requirements in the Miami-Dade market.

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.

Choosing a title company with deep experience in FIRPTA transactions is critical. An experienced agent can help sellers apply for exemptions or reduced withholding, ensuring the process is handled correctly and efficiently.

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 your foreign status to your real estate agent and title company at the very beginning of the listing process. If you believe you qualify for a reduced withholding, start the Withholding Certificate application immediately.

• For Buyers: When you make an offer on a property, your agent should inquire about the seller's status. You must sign an affidavit at closing confirming your intent to use the property as a personal residence if you are claiming an exemption.

• For Real Estate Agents: It is your professional responsibility to understand the basics of FIRPTA. You should advise your clients to seek expert legal and tax advice and connect them with a title company experienced in handling FIRPTA transactions.

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.