Selling a Miami condo or home as a non‑U.S. owner can feel smooth right up until closing, when you learn that up to 15% of your sale price may be withheld. If you plan ahead, you can avoid last‑minute surprises and, in some cases, reduce or eliminate that withholding. This guide explains how FIRPTA works in Miami closings, what documents you should prepare, and how to keep your proceeds moving without delay. Let’s dive in.
FIRPTA basics for Miami sellers
FIRPTA is a federal rule that requires tax withholding when a foreign person sells a U.S. real property interest. The withholding is a prepayment of federal income tax. It is not an extra tax on top of your actual liability.
You count as a foreign person if you are a nonresident alien or a foreign entity. U.S. citizens and U.S. resident aliens are not foreign persons. See how residency is determined in IRS Publication 519.
A U.S. real property interest includes land, buildings, and certain interests in entities that primarily hold U.S. real estate. FIRPTA is triggered by the transfer at closing and is enforced by the buyer or withholding agent. Federal law controls the rule, not Florida law.
For official background, review the IRS FIRPTA overview.
Withholding rates and buyer-use exceptions
The general FIRPTA withholding rate is 15% of the gross sales price when the seller is a foreign person. Miami closings often involve these common buyer-occupancy exceptions for residential property:
- Purchase price at or below 300,000 dollars with buyer occupancy. If the buyer certifies in writing that the property will be used as a residence, withholding is 0%.
- Purchase price over 300,000 dollars and up to 1,000,000 dollars with buyer occupancy. If the buyer certifies the property will be a residence, withholding is generally 10%.
- Purchase price over 1,000,000 dollars or no buyer occupancy. Withholding remains 15%.
The buyer or closing agent is responsible for withholding at closing and is liable if the correct amount is not withheld and remitted. This is why Miami title and escrow teams are careful about FIRPTA documentation early in escrow.
The 20‑day remittance rule
The withholding agent must file Form 8288 and remit the withheld funds to the IRS on time. The IRS sets strict deadlines, including a 20‑day remittance window after the date of transfer. You can find filing and remittance details in the IRS instructions for Form 8288.
How to reduce withholding with a certificate
If you expect little or no U.S. tax on your sale, you can apply for a withholding certificate so that the buyer withholds less than the statutory amount. You submit IRS Form 8288‑B with supporting documents and a calculation of your expected tax.
- If granted, the IRS will instruct the withholding agent to withhold a smaller amount. Sometimes that amount is zero.
- Processing can take weeks to months. Start as early as possible to avoid having the full amount withheld at closing.
When to apply and what to include
Apply as soon as your contract is executed. Your package typically includes the purchase agreement, draft settlement statement, deed, proof of your status, and a detailed tax estimate with basis documentation. For entities, include organizational documents and a U.S. EIN.
If the certificate arrives after closing
If the certificate is not issued in time, the statutory amount must be withheld at closing. Many Miami escrow agents will hold the funds until the certificate arrives or until they remit according to the statute. Once the IRS issues instructions, the withholding agent will follow the certificate and provide you with Form 8288‑A as proof of remittance.
Miami closing norms and what to prepare early
Miami closings usually run through title or escrow companies and attorneys familiar with international transactions. Local practice is to request FIRPTA documents upfront so there are no delays.
Prepare these items as early as possible:
- Valid passport and government ID.
- U.S. taxpayer ID: SSN, ITIN, or EIN. If you do not have one, apply for an ITIN using Form W‑7. This can take weeks, so start early.
- Form W‑8 for foreign status: individuals use Form W‑8BEN. Entities use Form W‑8BEN‑E.
- Organizational documents for entities: articles, bylaws or operating agreement, plus any trust or authority documents.
- Executed purchase agreement, draft ALTA settlement statement, and deed.
- Buyer occupancy affidavit, if the buyer plans to use the property as a residence.
- Supporting documents for a withholding certificate (if applying): basis records, prior U.S. tax returns, and your tax computation.
- Power of attorney if you will sign remotely. Many title companies require notarization and, for foreign POAs, an apostille or legalization.
Common Miami practices
- Title teams often request W‑8 forms, passports, and status documentation in the first week of escrow.
- Escrow may hold back the statutory amount at closing until an IRS certificate arrives or until they must remit.
- Buyers and escrow agents typically insist on either statutory withholding or a valid IRS certificate before releasing funds.
Avoid these common pitfalls
- Waiting to address FIRPTA until closing week. This leads to holdbacks and delayed proceeds.
- Delaying your ITIN or EIN application. Without a taxpayer ID, you may face filing delays and slower refunds.
- Assuming buyer certifications will solve everything. If a buyer will not occupy the property or the price is above 1,000,000 dollars, the occupancy exceptions do not apply.
- Missing IRS deadlines. Withholding agents face penalties if they do not file and remit on time.
A practical Miami timeline
Use this high-level schedule to keep your sale moving:
- Day 0 to 3: Ratify contract. Add a FIRPTA clause and confirm who is the withholding agent. Notify title of your foreign status. If buyer plans to occupy, have them prepare the occupancy certification. Engage a U.S. tax advisor and a Miami title or closing attorney experienced with FIRPTA.
- Day 3 to 14: Provide ID, W‑8BEN or W‑8BEN‑E, and entity documents. If you will request reduced withholding, prepare and file Form 8288‑B immediately with supporting records. If you need an ITIN, start Form W‑7.
- Two to six weeks before closing: Monitor the 8288‑B application status. Coordinate with escrow about potential holdbacks at closing if the certificate is not issued in time.
- Closing day: The withholding agent withholds per statute or the IRS certificate. The agent files Form 8288 and remits within the required timeframe.
- After closing: You receive Form 8288‑A as proof of the amount remitted on your behalf.
After closing: filing and refunds
You still need to report the sale on your U.S. tax return. Individuals typically file Form 1040‑NR, and entities file the applicable return. You claim credit for any amounts withheld using Form 8288‑A. If the withheld amount exceeds your actual tax liability, you can request a refund through your return. Keep organized records in case the IRS requests more information.
Quick checklist for international sellers
- Confirm your FIRPTA status and whether buyer occupancy exceptions could apply.
- Engage a U.S. tax advisor and a Miami title or closing attorney early.
- Gather ID, W‑8 forms, and entity documents.
- Secure an ITIN or EIN if you need one.
- Decide whether to apply for a withholding certificate and submit Form 8288‑B promptly.
- Coordinate with the withholding agent on remittance and paperwork.
- File your U.S. tax return post‑closing and use Form 8288‑A to claim credit.
Florida does not have a state individual income tax, but FIRPTA is federal. Plan for federal withholding regardless of Florida’s state tax landscape. With the right timeline and documentation, your Miami closing can move forward without avoidable holdbacks.
Ready to sell in Miami with confidence? Get a curated plan for your FIRPTA timeline, documents, and marketing so your proceeds and closing stay on track. Request a free consultation and home valuation with Unknown Company.
FAQs
What is FIRPTA for international sellers in Miami?
- FIRPTA is a federal rule that requires buyers or withholding agents to withhold tax at closing when a foreign person sells U.S. real property. The standard rate is 15% of the gross sales price unless an exception applies.
How can I qualify for reduced or zero FIRPTA withholding?
- You may qualify if the buyer will use the home as a residence and the price meets certain thresholds, or by obtaining an IRS withholding certificate via Form 8288‑B that sets a lower amount based on your expected tax.
Who is responsible for FIRPTA withholding at a Miami closing?
- The buyer or the designated withholding agent, often the title or escrow company, must withhold and remit funds using Form 8288 and provide Form 8288‑A to the seller.
What documents should I prepare before escrow opens in Miami?
- Passport, W‑8BEN or W‑8BEN‑E, entity or trust documents, purchase agreement, draft ALTA statement, buyer occupancy affidavit if applicable, and support for a potential Form 8288‑B application. If needed, start Form W‑7 for an ITIN.
When are FIRPTA funds due to the IRS after closing?
- The withholding agent must follow IRS deadlines, including remitting within 20 days after the date of transfer per the Form 8288 instructions.
Do I still need to file a U.S. tax return after a Miami sale?
- Yes. You report the sale on your U.S. return, typically Form 1040‑NR for individuals, and claim a credit with Form 8288‑A. If too much was withheld, you request a refund through that filing.
