FIRPTA

For informational and educational purposes only.

FIRPTA in Florida – What Foreign Sellers Need to Know

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Understanding FIRPTA (Foreign Investment in Real Property Tax Act)

When a foreign citizen or non-U.S. resident sells real estate in Florida or anywhere in the United States, the transaction may be subject to FIRPTA — the Foreign Investment in Real Property Tax Act.

FIRPTA is a federal tax law requiring that a portion of the sales price be withheld at closing to ensure any U.S. capital gains tax owed by the foreign seller is paid.

If you are selling property in Orlando, Central Florida, or elsewhere in the state as a non-U.S. citizen, FIRPTA may apply to your transaction.

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How FIRPTA Withholding Works in Florida

Under FIRPTA:

• Typically 15% of the total sales price is withheld at closing
• The funds are sent to the IRS within 20 days
• The buyer or title company is responsible for submitting the withholding

Important:

The 15% withholding is not an additional tax. It is a prepayment or credit toward any capital gains tax owed when the foreign seller files a U.S. tax return.

If the actual tax owed is lower, the seller may receive a refund after filing.

FIRPTA applies to residential, commercial, and investment property sales in Florida.

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When Does FIRPTA Apply?

FIRPTA withholding applies when:

• The seller is not a U.S. citizen
• The seller is not a U.S. permanent resident (Green Card holder)
• The property is located in the United States
• The property interest being sold includes residential, commercial, or rental property

FIRPTA does not apply when the seller is a U.S. person or qualified U.S. entity.

In Central Florida real estate transactions, the title company typically verifies FIRPTA status during closing preparation.

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FIRPTA Exemptions & Possible Reductions

In certain situations, FIRPTA withholding may be reduced or eliminated.

Common examples include:

Primary Residence Exception

If:

• The buyer intends to use the property as a primary residence
• The purchase price is $300,000 or less

FIRPTA withholding may not be required.

Withholding Certificate (IRS Form 8288-B)

A foreign seller may apply for a Withholding Certificate showing that the actual capital gains tax owed will be less than 15%.

If approved, the IRS may reduce the required withholding amount.

These applications should be handled by a qualified CPA or FIRPTA tax specialist and ideally submitted before closing to avoid delays.

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Why Professional FIRPTA Guidance Is Critical

FIRPTA compliance involves:

• IRS Form 8288
• IRS Form 8288-A
• Potential Form 8288-B (Withholding Certificate)
• Strict 20-day submission deadlines
• Accurate calculation of withholding amounts

Errors or missed deadlines can result in penalties and delays.

For this reason, both buyers and foreign sellers in Florida real estate transactions should work with:

• Certified Public Accountants (CPAs)
• FIRPTA tax specialists
• Title companies experienced with international transactions

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Selling Property in Orlando as a Foreign Owner

If you own investment property, a vacation rental, or a condo in communities such as Vista Cay Resort, and you are not a U.S. citizen or permanent resident, FIRPTA may impact your closing.

I regularly assist international clients buying and selling property in Central Florida and coordinate with experienced FIRPTA-compliant title companies and tax professionals to help ensure:

• Proper withholding calculations
• Accurate documentation
• Timely IRS submission
• A smooth, compliant closing process

Professional FIRPTA contacts are available upon request.

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FIRPTA Disclaimer

This information is provided for educational purposes only and should not be considered tax or legal advice.

FIRPTA requirements vary depending on individual circumstances, ownership structure, and tax status. Always consult directly with a qualified CPA, tax advisor, or real estate attorney regarding your specific transaction.

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