Tax when a foreigner sells US property: what is FIRPTA?
Short answer: FIRPTA is the federal law that, when a foreign owner sells US property, generally withholds 15% of the sale price at closing as a prepayment of tax. Nothing is withheld when you buy, so it pays to plan the purchase structure with the future sale in mind, with a CPA.
FIRPTA is an acronym that sounds scary, but the idea is simple. It's a US federal law about the sale of US property by foreign owners. Understanding it from the purchase avoids surprises down the road.
What is FIRPTA?
FIRPTA (Foreign Investment in Real Property Tax Act) requires that when a foreign person sells US real estate, a portion of the sale price (generally around 15%) is withheld and remitted to the US government at closing.
Does FIRPTA withhold anything when you buy?
No. When you buy, FIRPTA withholds nothing from you. It comes into play in the future, when you sell. That's why it's a matter of planning: thinking about the exit at the entrance.
Why think about it when you buy?
How you buy the property (in your own name or through a structure such as an LLC) can influence how FIRPTA and sale taxes affect you later. Deciding this with a good CPA before signing is usually cheaper than fixing it afterward.
What does it mean in practice?
It's not a reason for fear or to give up, it's a reason to plan. Lory Minici flags where FIRPTA matters and refers you to CPAs with international experience, so your purchase structure already accounts for the future sale.
How much does FIRPTA withhold?
Withholding depends on the sale price and on how the buyer will use the property:
| Situation at sale | Withholding |
|---|---|
| General rule | 15% of the sale price |
| Price up to $1 million and the buyer will live in the property | 10% |
| Price up to $300,000 and the buyer will live in the property | 0% (exempt) |
For entry prices by neighborhood, read How much does a condo cost in Miami or browse the neighborhoods with new developments.
Frequently asked questions
Is FIRPTA the final tax?
No. It is a prepayment. The actual tax is calculated on the seller's US return, and the difference can be refunded or owed.
Who collects FIRPTA?
The buyer (in practice, the closing agent) withholds the amount at closing and sends it to the IRS.
Can withholding be reduced?
In some cases, yes, by applying to the IRS for a withholding certificate before the sale. Do this with a CPA.
Sources: IRS, FIRPTA Withholding, NAR, FIRPTA changes; checked October 2026.
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