Cross‑border sales are common in Aventura, and that means FIRPTA is often part of the conversation. When a seller is considered a foreign person for U.S. tax purposes, the buyer may need to withhold a portion of the sale proceeds at closing. With the right plan, you can keep your timeline on track, protect both sides from risk, and move forward with confidence.
Why FIRPTA matters in cross‑border closings
FIRPTA exists to make sure the right U.S. taxes are collected when foreign sellers transfer U.S. real estate. For buyers, it is about following a clear process so you do not take on unexpected liability. For sellers, it is about preparing the right documents so funds are handled properly and any excess withholding can be recovered later. The goal is clarity, not complexity. A little structure early in the deal prevents last‑minute stress at the table according to the IRS overview of FIRPTA.
FIRPTA basics you need to know
Who FIRPTA can apply to
FIRPTA can apply when the seller is a foreign person under U.S. tax rules. That can include individuals who are not U.S. tax residents and some foreign entities. In certain cases, even domestic entities that are treated as foreign for tax purposes can fall under the rule. Because buyer awareness is key, both sides should confirm status early and decide the path forward together see the IRS definitions and scope.
How FIRPTA affects the transaction
If the seller is foreign and no valid exception applies, the buyer is typically responsible for withholding and making a filing with the IRS after closing. Title and escrow teams in South Florida often coordinate the mechanics, but the buyer remains the responsible party in the eyes of the IRS. Planning ahead helps you determine whether a certification, special application, or standard withholding will be needed so your closing stays smooth per IRS filing guidance for withholding agents.
Roles and responsibilities at each stage
Before you sign a contract
- Discuss seller status at offer. If the seller is not foreign under U.S. tax rules, a written certification can often clear the issue for the buyer.
- Build the plan into the contract and addenda. If withholding might apply, decide who will prepare filings, how funds will be handled, and what documentation each side will deliver.
- Engage advisors early. A title company with FIRPTA experience and a tax professional can help you choose the right path before deadlines start to compress as outlined in IRS resources.
During due diligence
- Verify eligibility for any relief. Some purchases may qualify for special treatment, and sellers can sometimes request a reduced withholding amount through an IRS application.
- Assemble documents. Sellers gather status certifications or support for any requested adjustments. Buyers confirm who will remit funds and file after closing.
- Align timelines. If you plan to request relief from the IRS, start early. Real‑world processing can take longer than expected, so do not depend on a last‑minute approval the IRS notes processing time expectations for applications.
At closing
- Confirm final status and instructions. If withholding applies, the settlement statement should reflect the holdback and who is responsible for filings.
- Execute required paperwork. Buyers and settlement agents complete the necessary federal forms and collect any certifications needed for the file per IRS instructions for reporting and payment.
- Remember state and county items. FIRPTA is separate from Florida documentary stamp tax. In Miami‑Dade, documentary stamp calculations and recording requirements differ slightly from other counties, so closers follow the county’s guidelines for deeds and fees see the Miami‑Dade Clerk’s official-records page.
After closing
- The buyer or designated agent sends the federal filing and withheld funds if required. Keep proof of mailing and delivery.
- The seller organizes records for any refund or credit when filing a U.S. tax return. If needed, the seller works with a tax advisor to secure any required identification number before filing as explained by the IRS on reporting and refunds.
- Both sides retain copies of certifications, filings, and receipts. Good records make future tax filings and audits faster and simpler.
Withholding, exemptions, and refunds
Understanding withholding at closing
When FIRPTA applies, a portion of the gross sale proceeds is set aside at closing. Depending on the plan, those funds may be sent to the IRS promptly or held per written instructions while a pending request is reviewed. Accurate classification of the seller and clean documentation determine which path is available per IRS rules for withholding agents.
Common pathways to reduce or avoid withholding
- A valid seller certification of non‑foreign status can allow the buyer to proceed without withholding.
- Certain residence purchases can qualify for relief if the buyer plans to occupy the home and other conditions are met.
- In some situations, the seller or buyer may request an IRS determination that reduces or removes the amount to be withheld when the standard amount would exceed the expected tax due. Each of these options requires careful documentation and timing see IRS guidance on exceptions and procedures and procedural instructions.
How refunds and adjustments can work
Withheld funds are treated as a deposit against the seller’s U.S. tax. If too much was withheld, the seller can usually claim a credit or refund when filing the appropriate U.S. return. A stamped confirmation from the federal filing helps support that claim. If the seller needs a U.S. tax identification number, that should be addressed as early as possible to avoid delays see IRS guidance on ITINs for buyers and sellers and reporting steps.
Documents and professionals involved
Key forms and affidavits
You will typically see a seller status certification, a buyer’s withholding return with an attached statement for the seller, and, in some cases, an application that asks the IRS to reduce the amount required. If the seller is not foreign, the status certification must include specific information and a signature under penalties of perjury to be effective per Treasury regulations on certifications.
Identification numbers and tax filings
Foreign sellers often need a U.S. taxpayer identification number for filings and refund claims. Foreign entities may need a federal employer number. Because these items can take time to obtain, start early and coordinate with your tax advisor and settlement team as the IRS explains.
Who you need on your team
- A title or escrow company with FIRPTA experience to manage funds, filings, and recording.
- A U.S. tax professional familiar with international sellers to guide certifications, identification numbers, and returns.
- Real estate counsel for complex ownership structures, trusts, or cross‑border entity issues.
- A real estate advisor who coordinates the process, aligns timelines, and keeps communication clear across time zones.
Avoiding delays and common pitfalls
Confirm status and strategy early
Determine the seller’s status at the outset and choose the pathway that fits your deal. The buyer remains responsible for proper withholding and filing if a valid exception does not apply, even when a title company assists per IRS instructions for withholding agents.
Align contract and closing instructions
Make sure the purchase agreement, addenda, and escrow instructions all reflect the same plan. If you intend to rely on a seller certification, confirm it includes every required element and that the buyer can rely on it in good faith see the regulation’s certification requirements.
Coordinate funds flow and record‑keeping
Decide how funds will be handled, who will prepare and submit the federal filing, and how proof of submission will be stored. In Miami‑Dade, also account for county documentary stamp tax and recording, which are separate from FIRPTA per the Clerk’s office.
Special considerations for new development and assignments
Assignments, entity sellers, and presale contracts may require extra steps or opinions. Involve experienced title, legal, and tax professionals early so your strategy matches the structure of the deal and the developer’s requirements the IRS overview is a helpful starting point.
Work with a team versed in international transactions
International closings work best with a graceful, well‑timed plan. That means clear communication, precise paperwork, and careful coordination with title, legal, and tax professionals. It also means anticipating time zones, language preferences, and digital signing needs. With the right team, FIRPTA becomes a tidy checklist instead of a roadblock.
Next steps to move forward with confidence
If you are preparing to sell or buy in Aventura and FIRPTA might apply, start early. Confirm status, align your approach in writing, and build a simple calendar for disclosures, filings, and funds flow. For a discreet conversation and a tailored plan, connect with Albina Zorina. You will get white‑glove guidance, curated presentation, and coordinated execution with trusted title and tax partners. Let’s make your closing elegant and on time.
FAQs
Who is responsible for FIRPTA withholding in Aventura closings?
- The buyer is usually treated as the responsible withholding agent, even when a title company manages the paperwork. That is why early planning and clear instructions matter per IRS instructions.
Can FIRPTA be avoided if the seller is not a foreign person?
- Yes. A valid seller certification of non‑foreign status can allow the buyer to proceed without withholding, provided the buyer can rely on it in good faith and it includes all required elements see the regulation’s certification rules.
Are there situations where withholding may be reduced?
What if a foreign seller does not have a U.S. taxpayer identification number?
- Apply as early as possible. A missing number can slow federal processing and refund claims. Your tax professional and title team can help you prepare the proper application and supporting documents per IRS ITIN guidance.
How does FIRPTA interact with Miami‑Dade documentary stamp tax?
- They are separate. FIRPTA is a federal withholding rule. Documentary stamp tax and recording are state and county matters handled through the Miami‑Dade Clerk at closing county guidance here.
What happens after closing if too much was withheld?
- The seller can generally claim a credit or refund when filing the appropriate U.S. tax return, supported by federal receipts and confirmations from the withholding filing per IRS reporting guidance.
We are buying a new‑development condo. Does FIRPTA change anything?
- The core rules are the same, but assignments, entity sellers, and developer timelines can add steps. Involve experienced title, legal, and tax advisors early so your approach fits the structure of the deal see the IRS FIRPTA overview.
