Florida FIRPTA Requirements for Real Estate Closings

FIRPTA is a federal withholding rule that can apply when a foreign person sells a U.S. real property interest, including Florida real estate. It is a closing issue because the buyer is generally the withholding agent. The seller's nationality alone does not resolve the tax analysis; the closing team should establish the seller's relevant tax status and consult qualified tax or legal counsel when needed.

The general rate is 15% of the amount realized, usually described as the gross sales price, rather than 15% of the seller's profit. A residence exception may eliminate withholding when the amount realized is $300,000 or less and the buyer meets the use requirements. A 10% rate may apply to a qualifying buyer residence when the amount realized is more than $300,000 but no more than $1 million. Other exceptions and withholding certificates may change the result. Do not promise an exemption merely because the seller lived in the home or expects to exclude a gain on a tax return.

Raise possible FIRPTA status with the closing agent as soon as the contract is signed. The title or attorney team and seller's tax adviser can identify needed certifications, taxpayer numbers, or a withholding-certificate application. Forms 8288 and 8288-A generally report and transmit withholding; the usual filing and payment deadline is 20 days after the transfer, subject to specific rules. A withholding certificate application can take time, so waiting until closing week can disrupt the transaction.

Christine Matus PA tracks the request and the responsible professional's response while keeping sensitive tax information with the appropriate party. 

Contact Christine for contract-to-close coordination.

Sources: IRS FIRPTA withholding; IRS reporting and payment.