Investing in real estate in Florida is one of the smartest ways for international buyers to build wealth, generate income, and protect assets in U.S. dollars.
However, when it comes time to sell a property, many foreign investors are surprised by a tax rule that can temporarily affect their proceeds: the Foreign Investment in Real Property Tax Act (FIRPTA).
In this guide, prepared with insights from Florida HomeGroup Realty, we explain what FIRPTA is, how it works, who it applies to, and how to minimize its impact, so you can manage your investments efficiently and legally.
1. What is FIRPTA?
FIRPTA (Foreign Investment in Real Property Tax Act) is a U.S. federal law enacted in 1980 that ensures foreign sellers of U.S. real estate pay applicable taxes on their profits.
In simple terms:
When a foreign investor sells property in the U.S., the buyer (or closing agent) must withhold a percentage of the sale price and send it to the IRS (Internal Revenue Service).
This amount is a temporary tax withholding, not a final tax. The seller can later file a tax return to report actual profits and request a refund if the withholding exceeds the tax due.
2. Who does FIRPTA apply to?
FIRPTA applies to any non-U.S. resident individual or entity selling real estate in the United States, including:
- Foreign individuals (non-resident aliens).
- Foreign corporations or partnerships.
- LLCs owned by foreign investors (depending on their tax structure).
Therefore, if you’re a Latin American investor selling property in Florida, your transaction will likely be subject to FIRPTA, unless you qualify for an exemption or reduction.
3. How much is withheld?
The standard FIRPTA withholding rate is 15% of the total sale price, regardless of actual profit or loss.
| Sale Price | FIRPTA Rate | Amount Withheld | Notes |
| $300,000 | 15% | $45,000 | Applies if the buyer won’t live in the property. |
| $500,000 | 15% | $75,000 | Standard withholding. |
| $900,000 | 15% | $135,000 | Can be adjusted with IRS certification. |
Remember: this is a withholding, not a tax. If your actual gain is smaller, you may be eligible for a refund after filing your return.
4. FIRPTA exemptions and reductions
Certain situations may reduce or eliminate the FIRPTA withholding entirely:
a) Property purchased for residential Use
If the buyer intends to use the property as a personal residence for at least 50% of the time during the first two years and the sale price is below $300,000, no FIRPTA withholding applies.
b) Withholding certificate (reduced rate request)
The seller can apply to the IRS for a Withholding Certificate, proving that the actual tax liability is less than 15%.
Once approved, the withheld amount can be reduced before being sent to the IRS.
c) Proper LLC or corporate structuring
When the property is owned under a properly structured LLC or corporation, the transaction can often be optimized to reduce or defer taxes.
Florida HomeGroup Realty works with tax advisors and attorneys who specialize in international transactions to help clients implement these strategies correctly.
5. Declaring and recovering the withheld funds
After the sale, the foreign investor must file a U.S. tax return with the IRS to determine the actual tax due.
If the tax owed is less than the amount withheld, the investor can request a refund.
The process includes:
- Obtaining an Individual Taxpayer Identification Number (ITIN).
- Completing IRS Forms 8288 and 8288-B (usually handled by the closing agent or accountant).
- Filing the annual return (Form 1040NR for individuals or 1120-F for corporations).
- Waiting for the refund, typically within 3–6 months.
Florida HomeGroup Realty helps guide clients through this process by connecting them with trusted bilingual tax professionals.
6. Practical example
Let’s say you sell a condo in Orlando for $500,000 USD, earning a net profit of $40,000.
Under FIRPTA, the buyer withholds $75,000 (15%) and sends it to the IRS.
When you file your tax return, you prove your actual tax liability is only $8,000.
As a result, you receive a refund of $67,000.
This is why it’s crucial to handle the FIRPTA process properly — to avoid leaving unnecessary money in the IRS’s hands.
7. Key recommendations for foreign investors
- Plan ahead — consult your accountant or tax advisor before signing a sales contract.
- Review your ownership structure — selling under an LLC may offer better tax efficiency.
- Apply for a reduced withholding certificate if eligible.
- Keep detailed purchase and expense records.
- Work with real estate agents experienced in FIRPTA transactions.
Florida HomeGroup Realty assists its clients throughout the sale process, ensuring compliance and helping minimize the impact of FIRPTA while maximizing post-tax returns.
Understanding FIRPTA protects your profits
FIRPTA should not be viewed as a barrier, but as a tax requirement that can be managed with proper planning.
Knowing how it works allows you to sell confidently, avoid penalties, and recover most of your profits.
With the expert guidance of Florida HomeGroup Realty, you can structure your sale efficiently, prepare documentation in advance, and ensure your investment in Florida remains secure and profitable.
Sell your Florida property confidently with expert international tax guidance.
Schedule your free consultation with Florida HomeGroup Realty
