You want to sell the apartment you bought in Miami. The price works, the market is with you, but one question keeps stopping you: as a foreign owner, how much will they withhold when I sell? You've heard the U.S. government keeps part of the proceeds at closing, you're not sure how much or why, and the mere thought of tens of thousands of dollars being deducted before you see your money is enough to postpone the decision.
That withholding has a name: FIRPTA. It's real, it's steep, and it's the reason many Latin American owners sell poorly — or don't sell at all. But it's also predictable and, to a large extent, reducible if you plan before closing. This note explains what it is, how much it withholds, on what base, and — most importantly — how to bring that withholding down to the tax you actually owe.
What FIRPTA is
FIRPTA stands for the Foreign Investment in Real Property Tax Act, a 1980 federal law. Its logic is simple: when a foreign seller disposes of U.S. real estate, the country wants to make sure it collects the capital gains tax before the money leaves its borders. Since a non-resident seller could leave without filing, the law shifts the responsibility to the buyer, requiring them to withhold a percentage of the price and remit it directly to the IRS at closing.
It isn't a new tax or a penalty on foreigners: it's a collection-security mechanism. The key point — which almost no one explains well — is that what gets withheld rarely matches what is actually owed.
How much is withheld, and on what base
Here's the part that confuses and frightens people most. FIRPTA doesn't withhold on your gain: it withholds on the gross sale price (the amount realized, the total value of the transaction). According to the IRS, the general rule is a withholding of 15% of the total price when the seller is a foreign person.
Withholding on the price rather than the profit has a brutal consequence: they can withhold even if you sell at a small gain or at a loss. You sell for $800,000 a unit you bought for $750,000; your actual gain is $50,000, but the base withholding would be 15% of the full $800,000 — that is, $120,000 — far above the tax owed on that gain.
The law itself recognizes lower brackets when the buyer will use the property as a residence:
- Price of $300,000 or less and the buyer will use it as a residence: withholding can be zero (IRS residence exception).
- Price between $300,000 and $1,000,000 and the buyer will use it as a residence: withholding drops to 10% of the price.
- Price above $1,000,000, or any case that doesn't qualify as the buyer's residence: the 15% rate applies.
These brackets depend on the buyer's intent, not the seller's, and require documentation. Don't take them for granted — confirm them transaction by transaction.
Who withholds, and when
The legal obligation falls on the buyer (the transferee), though in practice the work is executed by the closing agent or title company. They separate the withholding from the amount you would otherwise receive and remit it to the IRS with Forms 8288 and 8288-A — Form 8288 is the withholding tax return and 8288-A the statement documenting how much was withheld in your name. That remittance must be made, per the IRS, within 20 days after the date of transfer.
Translation: on closing day you don't receive the full price. You receive the price minus the withholding, which is already on its way to the IRS. Recovering that excess is a separate process — and it's where a well-planned sale parts ways from one that leaves money trapped for more than a year.
How to reduce the withholding: the withholding certificate
The 15% withholding is an advance payment, not the final tax. If your actual gain is small, you're prepaying far more than you owe. There are two ways to fix it.
The first and most efficient is the withholding certificate, requested with Form 8288-B. With it you ask the IRS to authorize withholding only the estimated maximum tax on your actual gain, instead of 15% of the gross price. In the example above, rather than withholding $120,000 on the price, the withholding could approach the tax on the $50,000 of real gain. Per its withholding-certificate rules, the IRS generally acts on these applications within 90 days of receiving a complete application including the taxpayer identification numbers (TINs) of all parties. The application must be submitted no later than the closing date.
The second route is to wait and claim: file your U.S. tax return the following year and request a refund of the excess withheld. It works, but it means your money sits with the IRS for many months. That's why the certificate, filed before closing, is almost always the better financial move.
The role of an advisor who runs the process remotely
None of this requires you to board a plane. FIRPTA's complexity isn't in signing: it's in coordinating the pieces in the right order and on time. Someone has to price the property with real market data, file Form 8288-B before closing so the window isn't missed, align the title agent with your accountant so the withholding goes out at the correct amount, and make sure the 8288-A is issued in your name to support any refund.
That's the role I play for owners in Mexico, Colombia, Chile and across the region: selling the property remotely, in your language, with signing handled by power of attorney and e-signature, and the FIRPTA withholding planned from the start rather than discovered at closing. None of this is definitive tax advice — your accountant or tax advisor validates the final numbers — but coordinating the process is what keeps the withholding from becoming a surprise.
The first step, at no cost
Before you worry about the withholding, you need to know what you can sell for. That's the starting point I can give you at no cost: a valuation of your Miami property using public-record data and real comparables from your building. With the price on the table, we estimate the FIRPTA withholding, assess whether the withholding certificate applies, and you decide with numbers — not fear.
Frequently asked questions
Does FIRPTA withhold on the gain or on the sale price?
On the gross sale price, not the gain. The general rule withholds 15% of the total transaction value when the seller is foreign, even if you sell at a small gain or a loss. That's why the withholding is usually far higher than the tax you actually owe — and why it pays to plan it.
How much does FIRPTA withhold when selling a Miami property?
15% of the price as the general rule. If the price is $300,000 or less and the buyer will use it as a residence, withholding can be zero; between $300,000 and $1,000,000 with residential use by the buyer, it drops to 10%; above $1,000,000, the 15% rate applies.
Can FIRPTA withholding be recovered?
Yes. It's an advance, not a final tax. You can apply for a withholding certificate (Form 8288-B) before or at closing to reduce the withholding to your estimated actual tax, or file your return the following year to claim a refund of the excess. The certificate frees the money much sooner.
Can I sell my Miami property without traveling to the United States?
Yes. Signing is handled remotely with a power of attorney and e-signature; title, escrow and the withholding are managed by the closing team in Miami. With an advisor coordinating the process, the withholding certificate and the tax side, you sell without boarding a plane.