Florida is one of the most popular destinations in the world for international real estate investment. Buyers from Latin America, Europe, Canada, and beyond have long been drawn to Central Florida’s combination of warm weather, strong rental markets, and relative affordability compared to other major markets.
When it comes time to sell, however, foreign nationals face a set of requirements that domestic sellers do not. Understanding FIRPTA before you get to the closing table helps you avoid surprises and ensures your transaction closes smoothly.
What FIRPTA is
FIRPTA stands for the Foreign Investment in Real Property Tax Act. It is a federal law enacted in 1980 that requires buyers of US real estate to withhold a percentage of the purchase price when the seller is a foreign national, and to remit that withholding to the Internal Revenue Service.
The purpose of FIRPTA is to ensure that foreign sellers pay US taxes on any gain realized from the sale of US real estate. Without the withholding requirement, the IRS would have limited ability to collect taxes from sellers who return to their home countries after closing.
Who is considered a foreign person under FIRPTA
For FIRPTA purposes, a foreign person includes non-resident aliens, foreign corporations, foreign partnerships, foreign trusts, and foreign estates. US citizens and permanent residents are not subject to FIRPTA withholding regardless of where they currently live.
If you are uncertain about your status under FIRPTA, consult with a qualified US tax attorney or CPA before you list your property. Getting clarity on this early prevents complications at closing.
The withholding requirements
The standard FIRPTA withholding rate is a percentage of the gross sales price, not the gain. This distinction is important. The withholding is calculated on the full purchase price, not on your profit. Depending on your actual gain, the amount withheld may be more than your actual tax liability, in which case you can apply for a refund by filing a US tax return.
The withholding rate can vary based on the purchase price and the buyer’s intended use of the property. Your closing agent and tax advisor can walk you through the specific rate that applies to your transaction.
Withholding certificates
Foreign sellers who believe the withholding amount will exceed their actual tax liability can apply to the IRS for a withholding certificate, which can reduce or eliminate the withholding requirement. The application process takes time, however, and must be initiated well in advance of closing.
If you are planning to sell and believe a withholding certificate may apply to your situation, talk to your tax advisor early in the process. Waiting until you are under contract is often too late to complete the application before closing.
The buyer’s responsibility
Under FIRPTA, it is actually the buyer who is legally responsible for withholding and remitting the required amount to the IRS. In practice, the closing agent typically handles the mechanics of the withholding as part of the closing process.
Buyers who fail to withhold when required can be held personally liable for the tax owed. This is why FIRPTA compliance is taken seriously by title companies and closing agents throughout Florida.
State tax considerations
In addition to federal FIRPTA requirements, Florida may have its own withholding requirements for foreign sellers in certain transactions. Your closing agent and tax advisor can advise you on any state-level obligations that apply to your specific situation.
Working with the right professionals
FIRPTA compliance requires coordination between your real estate agent, your title company, and a qualified US tax professional. If you are a foreign national selling property in Florida, make sure your team includes a CPA or tax attorney with specific experience in international real estate transactions.
We work with foreign sellers in Central Florida and are familiar with the FIRPTA process and the professionals best positioned to help you navigate it correctly. For official guidance, the IRS provides FIRPTA information at irs.gov and a qualified international tax attorney can advise on your specific situation.
Selling Florida real estate as a foreign national? We have experience working with international sellers and can connect you with the right professionals to make sure your transaction is handled correctly.
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