FIRPTA Explained: What Every International Buyer in Miami Beach Needs to Know (2026)

FIRPTA is a four-letter acronym that appears in almost every Miami Beach closing involving a foreign buyer or seller — and is misunderstood by almost as many. It stands for the Foreign Investment in Real Property Tax Act, and if you're not a U.S. citizen or permanent resident, it affects two different moments in your real estate journey: when you eventually sell, and if you ever purchase from another foreign seller.

This guide explains how FIRPTA works, what the current withholding rates are, and the four most expensive myths international buyers carry into a closing. None of this is legal or tax advice — every situation is fact-specific, and the decisions that reduce your FIRPTA and estate-tax exposure are best made with a U.S. international tax attorney and a CPA before you make an offer.

What FIRPTA Actually Is (and Who Is Responsible)

FIRPTA (IRC §1445) is a federal income-tax withholding mechanism. When a foreign person sells U.S. real property, the buyer — not the seller — is required to withhold a percentage of the amount realized and remit it to the IRS within 20 days of closing.

Two points that trip buyers up immediately:

• Withholding is based on the gross sales price, not the profit. If a foreign seller receives $1.5 million for a condo they paid $1.8 million for, the standard 15% withholding still applies to the full $1.5 million — not to a gain that doesn't exist. The seller files a U.S. tax return and can recover any overpayment as a refund.
• The buyer is the withholding agent. The legal obligation to withhold and remit belongs to the buyer. In practice, your title company handles the mechanics at closing — but if a buyer fails to withhold from a foreign seller, the IRS holds the buyer liable for the amount that should have been withheld, plus interest and penalties.

Who Is a "Foreign Person" Under FIRPTA

Under FIRPTA, a foreign person is a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate. U.S. citizens are never foreign persons under FIRPTA, regardless of where they live. Permanent residents (green card holders) are generally excluded as well.

For most Latin American and European buyers considering Miami Beach condos — without a U.S. green card or citizenship — the classification is straightforward: you are a foreign person under FIRPTA.

The Three Withholding Rates

As of 2026, FIRPTA withholding follows a three-tier structure based on the amount realized (the sales price) and the buyer's intended use of the property. These rates were set by the PATH Act of 2015 and have not changed since (source: IRS Form 8288 Instructions):

• 0% — No withholding when (a) the amount realized is $300,000 or less and (b) the buyer acquires the property for use as a personal residence. Both conditions must be satisfied.
• 10% — Reduced withholding when (a) the amount realized is between $300,001 and $1,000,000 and (b) the buyer acquires the property for use as a personal residence. Both conditions must be satisfied.
• 15% — General rate for all other dispositions: investment properties, any property sold for more than $1 million regardless of use, or any property where the buyer will not use it as a primary personal residence.

For most Miami Beach luxury condo transactions — where prices typically exceed $1 million and buyers are often investors rather than primary residents — the 15% general rate applies. On a $2 million sale, that is $300,000 held at the moment of closing transfer, regardless of the seller's actual gain.

How the Money Flows: Form 8288 and Getting a Refund

When withholding applies, the process works as follows:

1. The buyer (or title company acting on the buyer's behalf) withholds the required amount at closing.
2. The buyer files Form 8288 and remits the withheld amount to the IRS within 20 days of the transfer date.
3. The buyer also prepares Form 8288-A (a withholding statement); the IRS stamps a copy and sends it to the foreign seller.
4. The foreign seller files a U.S. tax return (Form 1040-NR for individuals) and computes actual tax on the gain. The stamped 8288-A amount is credited against the actual tax owed.
5. If the amount withheld exceeds the actual tax liability — or if there was no gain — the seller receives a refund from the IRS.

The withholding is a prepayment, not the final tax. A foreign seller who sold at a loss, or who has a modest gain relative to the withheld amount, can recover the overpayment through the U.S. tax return process.

The Withholding Certificate (Form 8288-B): The Overlooked Tool

One of the most underused tools available to foreign sellers is the Withholding Certificate. If your anticipated U.S. tax liability on the gain is less than the standard 15% withholding, you — or the buyer, or an authorized representative — can apply to the IRS for a reduction or elimination of withholding before closing, using Form 8288-B.

If Form 8288-B is filed on or before the closing date and is pending with the IRS at the time of transfer, the buyer still withholds the full amount — but does not remit it to the IRS until 20 days after the IRS issues the certificate or denial. The withheld funds sit in escrow. IRS processing typically runs 30 to 90 days.

For a Miami Beach condo owner who purchased near the 2018–2022 price peaks and is selling today at a modest gain relative to the purchase price, the gap between 15% of the gross sales price and the actual tax on the gain can be substantial. A Withholding Certificate is worth the planning effort — but the application process starts well before signing a contract.

Your Ownership Structure Changes the FIRPTA Equation

How you hold the property determines how FIRPTA applies. Several common structures are frequently misunderstood:

Single-Member LLC (Disregarded Entity)

This is the most common FIRPTA misconception. A single-member LLC owned by a foreign person is a disregarded entity for U.S. tax purposes — the IRS looks through the LLC to the individual owner. FIRPTA applies exactly as if the foreign person owned the property directly (IRS Definitions of Terms and Procedures Unique to FIRPTA). The LLC provides liability separation and privacy, but it does not change the FIRPTA outcome.

Multi-Member LLC (Partnership Treatment)

A multi-member LLC treated as a partnership is subject to different withholding rules under IRC §1446, which applies to a foreign partner's allocable share of effectively connected income. The rate and mechanics differ from the standard §1445 FIRPTA rules. This structure requires advice from a specialist in U.S. international partnership taxation.

Domestic Corporation

A U.S. corporation (incorporated in the United States, regardless of who owns the stock) is not itself a "foreign person." However, selling stock in a U.S. Real Property Holding Corporation (USRPHC) is itself considered a U.S. real property interest and triggers separate FIRPTA-related obligations. Additionally, a 2025 proposed IRS regulation (Reg-109742-25) would affect look-through rules for domestic corporations — this rule is not yet final. Professional guidance is essential before choosing this structure.

Trusts

A revocable grantor trust where the grantor is a foreign person is treated as a foreign person — the IRS looks through the trust to the foreign grantor, and FIRPTA applies. An irrevocable trust with a foreign grantor and a domestic trustee involves a more complex analysis under IRS regulations. Holding property "in a trust" is not categorically a FIRPTA exemption — the outcome depends on the specific trust structure and grantor classification.

FIRPTA Is Not Estate Tax — But Estate Tax Is a Bigger Number for Most Foreign Buyers

FIRPTA is an income-tax withholding mechanism triggered at sale. U.S. federal estate tax is a separate transfer tax triggered at death. They operate under different sections of the tax code, with different rates and — critically — very different exemptions.

For a U.S. citizen, the federal estate tax exemption is $15,000,000 starting January 1, 2026 — raised permanently by the One Big Beautiful Bill, signed July 4, 2025. For a nonresident, non-citizen individual, the exemption on U.S.-situs assets (which includes U.S. real property) is $60,000. This figure is unchanged by the 2025 legislation. The federal estate tax rate goes up to 40%.

In practical terms: a foreign buyer who purchases a $2 million Miami Beach condo and holds it in their personal name has potentially exposed nearly $1.94 million of that value to a 40% federal estate tax at death. The ownership structure that minimizes this exposure — and the trade-offs it creates in terms of FIRPTA treatment, income tax, and cost — must be chosen before the purchase.

When You're Buying From a Foreign Seller

FIRPTA obligations don't disappear when the buyer is also a foreign national. If you are purchasing from a foreign seller:

• You are the legally designated withholding agent. The obligation to withhold and remit belongs to you, not the seller.
• Your Florida title company handles the paperwork (Forms 8288 and 8288-A) and the remittance to the IRS as part of the standard closing process. This is routine in Miami Beach closings.
• If a Withholding Certificate (Form 8288-B) is pending at closing, the withheld funds go into escrow rather than immediately to the IRS. Your title company will manage the hold period.
• Florida has no state income tax. There is no state-level withholding layer on top of federal FIRPTA for Florida real property — only the federal rules described here apply.

Four Myths That Cost International Buyers Money

Myth 1: "My single-member LLC protects me from FIRPTA"

Reality: A single-member LLC owned by a foreign person is a disregarded entity for U.S. tax purposes. The IRS treats you as the direct owner of the property. FIRPTA applies identically to the LLC scenario and to direct personal ownership. The LLC remains valuable for liability separation and privacy — those are real benefits — but it does not change the FIRPTA analysis.

Myth 2: "The 15% withheld at closing is the tax I owe"

Reality: 15% of the gross sales price is withheld as a prepayment toward your U.S. income tax liability on the actual gain. If your actual gain tax is lower than the amount withheld — or if you sold at a loss — you file a U.S. non-resident tax return and receive the overpayment as a refund. You can also apply for a Withholding Certificate (Form 8288-B) before closing if you expect the actual tax to be materially less than 15% of the proceeds.

Myth 3: "I'll figure out the ownership structure before I sell"

Reality: The ownership structure decision must happen before you make your initial offer — not before you sell. Restructuring after acquisition (transferring into a different entity, retitling) can itself be a taxable event with its own costs. The entity type chosen at purchase determines your FIRPTA exposure, your estate-tax exposure, and your income tax treatment during the entire holding period. Structure first, then buy.

Myth 4: "As a buyer, FIRPTA is the seller's problem"

Reality: The buyer is the withholding agent under federal law. If you purchase from a foreign seller and fail to withhold the required amount, the IRS holds the buyer personally liable for the amount that should have been withheld, plus interest and penalties. Your title company handles the mechanics, but the legal responsibility belongs to the buyer.

Practical Checklist Before You Make an Offer

• Assemble your advisory team. A U.S. international tax attorney (for entity structure and estate planning) and a CPA with cross-border real estate experience (for FIRPTA estimates and return compliance). Both advisors should be engaged before you sign anything.
• Decide your ownership structure. Personal name, single-member LLC, multi-member LLC, domestic corporation, or trust — each has different implications for FIRPTA, estate tax, and ongoing compliance. The decision is significantly harder and more expensive to change after closing.
• Ask about the seller's residency status. Your buyer's agent and title company handle the formal FIRPTA affidavit process — but knowing early whether the seller is a foreign person helps your team plan the withholding mechanics and avoid closing-day surprises.
• Model the Withholding Certificate option. If you eventually become a seller, and your actual gain tax would be lower than 15% of the gross price, a Form 8288-B application started months before closing can free up significant cash at transfer. Build this into your exit planning.

The Bottom Line

FIRPTA is manageable when you understand the rules before you need them. The 15% withholding on gross proceeds is not the end of the story — it's the start of a refund process if actual tax is lower. The Withholding Certificate is a legitimate tool to reduce the cash held at closing. And the ownership structure question needs to be answered before you make an offer, because it drives both your FIRPTA and estate-tax outcomes for as long as you hold the property.

The buyers who navigate FIRPTA well are the ones who treat it as a planning question, not a closing-day surprise.

General information only. Not legal or tax advice. U.S. tax law is complex and highly situation-specific. Consult a qualified U.S. international tax attorney and a CPA with cross-border real estate experience before making any purchase or ownership-structure decision. Sources: IRS FIRPTA Withholding (IRS.gov), IRS Form 8288 Instructions, IRS Definitions Unique to FIRPTA, IRS FAQ for Nonresident Estates, The Tax Adviser (April 2025).