Selling Florida property as a foreign owner

What is withheld on the day of closing?

15% of the sale price, held back at closing. Not 15% of the gain — 15% of the price. On a $600,000 sale that is $90,000.

The rule is FIRPTA, the Foreign Investment in Real Property Tax Act, and it applies whenever the seller is a foreign person. It is not optional and it is not something the two sides can agree to skip: the buyer is the one legally required to withhold, and if they do not, the IRS comes after the buyer. That is why they will do it, and why asking them not to gets you nowhere.

“Will live there” is not a courtesy — it has a definition. The buyer must have definite plans to reside in the property for at least 50% of the days it is used in each of the first two twelve-month periods after the sale. It is a commitment the buyer makes in writing, which is why they do not always agree to make it.

IRS, FIRPTA withholding, and section 324(b) of the PATH Act, which set the 10% band for dispositions after 16 February 2016.

How do I get less withheld?

With form 8288-B, and by applying when you list the property, not when you are already under contract. It takes about 90 days.

Form 8288-B is an application for a withholding certificate. You show the IRS what your actual tax will be, and it authorises the buyer to withhold that figure instead of the flat 15%. The form is not the hard part. The order is, and the order is where the money gets stuck.

A normal Florida closing runs thirty to forty-five days. If the 8288-B goes in once a contract is signed, the certificate does not arrive in time, the closing does not wait for it, and the withholding comes out at 15%. Nothing is lost — but nothing is available either, until you file a return the following year.

What do I actually owe, and when does the rest come back?

Tax on the gain, at the same rates a U.S. seller pays — 0%, 15% or 20% if you held it more than a year. The closing withholding is not the tax. It is a deposit.

The account is settled when you file a non-resident return, form 1040-NR, for the following tax year. The FIRPTA withholding is credited against what you owe, and the excess is refunded. Here is a $600,000 sale on a house bought for $480,000:

Seventy-eight thousand dollars of yours, parked for a year, is not an administrative detail. It is the difference between being able to fund the next purchase and not. That is why the previous section comes before this one.

And if you held it less than a year, there is no preferential rate at all: short-term gain is taxed at ordinary income rates, which are higher. Selling at eleven months and selling at thirteen are not the same return.

2026 long-term capital gains brackets: IRS Revenue Procedure 2025-32. A sale of U.S. real property by a non-resident is taxed as income effectively connected with a U.S. trade or business and reported on form 1040-NR, where the FIRPTA withholding is credited as a payment.

Can I defer the tax with a 1031 exchange?

Yes. Section 1031 does not ask about nationality. But FIRPTA does not pause itself, and that is the part that catches foreign sellers.

If the property was held for investment, you can defer the gain by reinvesting in another investment property: 45 days to identify the replacement in writing, 180 days from the same closing to complete it.

Here is the knot a U.S. seller never runs into. In a 1031 the money does not pass through your hands — it goes to a qualified intermediary. If 15% of it is taken out on its way to the IRS, the amount available to reinvest drops, and the exchange no longer covers the gain. So as a foreign owner, the 8288-B and the 1031 are prepared together, from the start, not one after the other.

Two things a 1031 is not. It does not work on the home you live in or a second home in personal use — it has to be held for business or investment, and the IRS looks closely at that distinction. And it is not an exemption: it is a deferral. The tax is still there, waiting for the sale you do not reinvest.

IRS, Like-kind exchanges — real estate tax tips. Since 2018 section 1031 applies only to real property held for business or investment.

If the owner dies: the $60,000 almost nobody knows about

A U.S. citizen or resident passes $15,000,000 free of estate tax. A non-resident foreign owner passes $60,000. Above that, the IRS taxes U.S.-situated assets — and a Florida house is one — at rates reaching 40%.

It is the largest single difference in this guide and the least discussed, because it does not show up on closing day. It shows up when the person who could have fixed it is gone.

On a $600,000 house held in an individual foreign name, the taxable estate is not $600,000 less debts and expenses down to nothing. It is that $600,000 less $60,000. The executor files form 706-NA within nine months of the death, and until that is resolved the property does not transfer cleanly.

IRS, Some nonresidents with U.S. assets must file estate tax returns: form 706-NA is required when U.S.-situated assets exceed $60,000. The 2026 exclusion for citizens and residents is from Revenue Procedure 2025-32, following Public Law 119-21.

Does my country have a treaty, and does it help?

If you are Canadian, British, German, French, Japanese or from nine other countries, yes — materially. If you are from most of the rest of the world, including all of Latin America, no.

The United States has estate tax treaties with fifteen countries, and they matter far more than most owners realise. Under several of them a non-resident is entitled to a share of the full U.S. exclusion — pro-rated by the proportion of their worldwide estate that sits in the U.S. — rather than the flat $60,000. For a Canadian owner with a $600,000 Florida condo and a large estate at home, that can be the difference between a large estate tax bill and none.

Whose name should the property be in?

There is no answer that is right for everybody, and anyone who tells you otherwise has not looked at your situation. Each structure solves one thing and makes another worse.

What shields you from estate tax usually costs you more on the sale, and the reverse. These are the four you will be offered, with what each one actually does:

This is not a real estate decision. It is a tax and legal one, and it gets made before you buy or in a quiet moment — never with a signed contract on the table, because changing title right before a sale has consequences of its own. We do not make it. We tell you what to ask a tax attorney, and we put you in front of one.

When do I stop being a foreign owner?

When you hold a green card, or when you meet the substantial presence test — and at that point FIRPTA stops applying to you, but the United States starts taxing your worldwide income.

The substantial presence test counts days over three years: all the days in the current year, plus a third of last year’s, plus a sixth of the year before. If that total reaches 183 and you were here at least 31 days this year, you are a U.S. tax resident.

People who spend long winters in Florida cross that line without meaning to. It is not necessarily bad — it removes the 15% withholding, it removes the $60,000 estate exposure, and it makes the $250,000 primary residence exclusion available if you live in the home. But it also means reporting income you earn anywhere in the world. It is a decision to take deliberately, not to drift into by counting badly.

What Florida itself charges through all of this: nothing on the gain. There is no state income tax here, and that includes capital gains, whoever you are. What you do pay at closing is the documentary stamp tax on the deed — $0.70 per $100 of the price statewide, and customarily the seller’s cost.