Foreign Investors & FIRPTA
South Florida real estate attracts buyers from all over the world, and the U.S. tax rules follow them from purchase to sale. We help foreign owners report rental income, plan ownership structures and recover excess FIRPTA withholding when they sell.
How Nelson & Associates handles Foreign Investors & FIRPTA
When a foreign person sells U.S. real property, the Foreign Investment in Real Property Tax Act (FIRPTA) generally requires the buyer to withhold 15% of the gross sales price and send it to the IRS. That is usually far more than the tax actually owed, so the seller must file a U.S. return to get the excess back. With planning, a withholding certificate can reduce the amount withheld at closing.
Foreign owners who rent out U.S. property also have annual filing obligations. Electing to treat rental income as effectively connected with a U.S. business lets you deduct expenses and depreciation instead of paying 30% withholding on gross rent. We handle the elections, the returns and the ITIN applications that make it all work.
Who this is for
- Foreign individuals who own condos or homes in Florida
- Foreign buyers deciding how to hold U.S. property
- Sellers facing FIRPTA withholding at closing
- Title companies and closing attorneys handling foreign sellers
- Foreign landlords receiving U.S. rental income
- Heirs inheriting U.S. property from a foreign owner
Everything covered in our Foreign Investors & FIRPTA service
- Ownership structure review: individual, LLC, corporation or trust
- Withholding certificate applications (Form 8288-B)
- Nonresident returns to claim FIRPTA refunds
- Net-basis election for rental income
- Annual rental income returns for foreign owners
- ITIN applications (Form W-7)
- Coordination with closing agents on Forms 8288 and 8288-A
- U.S. estate tax exposure review for foreign owners
The paperwork behind Foreign Investors & FIRPTA
| Form 8288 | Withholding on dispositions by foreign persons of U.S. real property |
|---|---|
| Form 8288-A | Statement of withholding given to the foreign seller |
| Form 8288-B | Application for a withholding certificate to reduce withholding |
| Form 1040-NR | Nonresident return reporting the sale or rental income |
| Form W-7 | Application for an individual taxpayer identification number |
| Form 1042-S | Foreign person's U.S.-source income subject to withholding |
What we’ll need from you
Have these ready and your first meeting goes faster. Missing something? We’ll help you find it.
- Passport and ITIN, if you already have one
- Purchase closing statement and improvement records
- Sale contract and expected closing date
- Rental income and expense records
- Prior U.S. returns, if any were filed
- Entity documents if the property is held in a company
How it works, step by step
Before closing
We review the sale and decide whether a withholding certificate makes sense.
At closing
We coordinate with the title company on withholding and forms.
After closing
We file the return that claims back excess withholding.
Every year
Rental owners get annual returns and planning reminders.
Why clients choose us for Foreign Investors & FIRPTA
Miami market experience
Foreign ownership of Florida real estate is a core part of our practice.
Faster refunds
Proper paperwork and early planning reduce money tied up with the IRS.
Structure advice
We explain the income and estate tax effect of each ownership choice.
One point of contact
We coordinate with your realtor, title agent and attorney.
Foreign Investors & FIRPTA across the United States
From our Doral office we provide Foreign Investors & FIRPTA to clients in all 50 states and Washington, D.C. Hover over a state to see its tax profile and the cities we serve; tap it to open the state page.
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Foreign Investors & FIRPTA FAQs
6 answers to the questions clients ask most. Don’t see yours? Ask us directly.
How much is withheld when a foreign person sells U.S. property?
Generally 15% of the gross sales price. Lower rates or exemptions can apply for some residential sales to buyers who will live in the property, and a withholding certificate can reduce the amount based on the actual expected tax.
How do I get the withholding back?
By filing a U.S. income tax return for the year of the sale that reports the gain and credits the amount withheld. Any excess is refunded.
Do I need an ITIN?
Yes, to file a U.S. return or claim a refund you need a taxpayer identification number. We prepare Form W-7 with your return.
I rent out my Miami condo. Do I owe U.S. tax?
Yes. By default, 30% of gross rent should be withheld. Most owners instead elect to be taxed on net rental income after expenses and depreciation, which usually results in much less tax.
Is there U.S. estate tax for foreign owners?
Potentially. Nonresidents who directly own U.S. real estate can be subject to U.S. estate tax with a much smaller exemption than U.S. citizens. Ownership structure matters, so we review it with you and your attorney.
Do you offer Foreign Investors & FIRPTA outside Florida?
Yes. Our office is in Doral, Florida, and we work with clients across the United States and abroad through secure uploads, phone and video meetings and e-signatures. South Florida clients are welcome to meet with us in person.
Talk to a CPA about Foreign Investors & FIRPTA.
Your initial consultation is free. Call us, email us or visit our Doral office, and we’ll tell you exactly what you need and what it will cost.