Selling property in Florida can feel like a win, especially if you’re getting out with a profit. But if you’re not a U.S. citizen, there’s something extra waiting for you at the closing table: the IRS. Foreign sellers are often surprised to learn that the government takes a chunk of the sale up front, and if you’re not prepared, it can cause delays, penalties, or lost money.
FIRPTA stands for the Foreign Investment in Real Property Tax Act. It’s a federal law that requires buyers to withhold part of the money from a real estate sale if the seller is not a U.S. citizen. This means the buyer must send that money directly to the IRS instead of the seller. In most cases, it’s 15% of the sale price.
If you are not a U.S. citizen and do not have permanent residency (like a green card), the IRS sees you as a foreign person. Even if you live in the U.S. part-time or have a visa, you may still fall under FIRPTA. The rules look at your tax status, not just your location.
How Much Is Withheld?
Most of the time, 15% of the gross sales price must be withheld. This is not based on your profit but on the full amount the buyer pays. So, even if you don’t make any money on the sale, FIRPTA can still apply. In some cases, the buyer may need to withhold 10%, such as if the property is worth $300,000 or less and the buyer plans to live in it.
Can You Get the Money Back?
Yes. FIRPTA is a withholding, not a tax. You may be owed a refund if the tax you actually owe is less than the amount withheld. But to get that money back, you have to file a U.S. tax return and wait for the IRS to process it. This can take several months.
There are some situations where FIRPTA doesn’t apply. For example, if the property is under $300,000 and the buyer plans to use it as a home, the buyer might not have to withhold any money. But that exception has rules, and it’s not automatic. You’ll need to prove you qualify and file the correct paperwork on time.
If the buyer doesn’t properly withhold the money, the IRS can go after them. That means buyers are usually very strict about getting this done correctly. If FIRPTA is missed or mishandled, it can hold up the sale or lead to legal problems.
Why You Should Plan Ahead
FIRPTA can slow things down if you wait until the last minute. You might need to get a tax ID number (ITIN), fill out IRS forms, or work with someone who knows how to handle the paperwork. Planning ahead can save you time, money, and stress, especially when the sale is on a tight timeline.
If FIRPTA applies to your sale, don’t guess your way through it. Work with someone who deals with these transactions regularly. A good advisor can help you prepare the right forms, reduce how much is withheld, or get your refund faster.
Call the Law Office of Ray Garcia, P.A.
We work directly with sellers, buyers, and real estate professionals across South Florida to handle FIRPTA correctly and efficiently. If you’re a foreign seller or helping one close a deal, reach out to our office. We’ll walk you through what to do next.
Garcia & Garcia Attorneys at Law
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