Thinking of selling your vacation home in the Disney area? If you’re a foreign national who owns real estate in Central Florida, there’s a crucial law you need to know about before closing: FIRPTA, the Foreign Investment in Real Property Tax Act.
This blog breaks it down in simple terms and outlines when you might qualify for an exemption, especially if your buyer is a U.S. resident.
🇺🇸 What Is FIRPTA?
FIRPTA is a U.S. tax law that requires buyers to withhold 15% of the gross sales price when a foreign seller sells U.S. real estate.
📌 Example:
If you sell your vacation home in Davenport for $400,000, the buyer must withhold $60,000 at closing and send it to the IRS, unless you qualify for an exemption or reduction.
This isn’t necessarily a tax you lost, just a withholding. But you must take action to reduce or reclaim it!
🧾 Who Does FIRPTA Apply To?
FIRPTA applies if:
You are not a U.S. citizen
You do not hold a green card
You file taxes as a non-resident alien
You are selling U.S. real property (vacation home, investment property, land)
If all of the above apply to you, FIRPTA is triggered.
🧯 Can You Avoid the 15% Withholding?
In many cases, YES, especially if your buyer is a U.S. resident who plans to live in the home.
Here are the key FIRPTA exemptions and reductions you may qualify for:
✅ 1. Buyer Will Use the Home as a Primary Residence, Exemption Up to $300,000
If the following conditions are met, no FIRPTA withholding is required:
Buyer is a U.S. resident
Buyer intends to occupy the home as their primary residence
Sale price is $300,000 or less
👉 In this case, your buyer signs an affidavit at closing, and the 15% is not withheld.
💲 2. Sale Price Between $300,001 and $1,000,000, Partial Withholding
If:
The buyer is a U.S. resident
Buyer will live in the property
The sale price is between $300,001 and $1,000,000
Then the withholding rate may be reduced to 10% instead of 15%.
💡 Your title company will typically handle this reduction if the buyer meets the occupancy requirement and signs the proper certification.
📝 3. Apply for a Withholding Certificate (IRS Form 8288-B)
If you’re not exempt, but:
You are not making a profit, or
You are making less than the 15% withheld,
you can file Form 8288-B to request the IRS reduce or refund the amount held.
Timing matters! File the form before closing, and the title company can hold the funds in escrow rather than sending them directly to the IRS.
⏱️ Timing & What You Need to Do
Confirm your tax residency status (Foreign national = FIRPTA applies)
Check the buyer’s intent , will they live in the home?
Work with an experienced real estate agent and title company familiar with FIRPTA
If needed, file Form 8288-B early to prevent over-withholding
File a U.S. tax return the year after the sale to reconcile the actual tax owed and claim a refund if applicable
📂 What Documents Are Needed?
Your ITIN (Individual Taxpayer Identification Number), or apply for one during the process
The buyer’s occupancy affidavit (if applying for an exemption)
IRS forms (8288, 8288-A, or 8288-B depending on your case)
A real estate agent and closing team who understand FIRPTA compliance
🤝 Why You Need an Expert
Many real estate agents don’t fully understand FIRPTA, but mishandling it can cost you thousands. As a real estate professional specializing in foreign national vacation home sales in Central Florida, I guide sellers like you through FIRPTA step by step:
✅ Connecting you with FIRPTA-savvy title companies
✅ Helping buyers complete residency affidavits for exemptions
✅ Working with IRS-authorized agents to file Form 8288-B
✅ Making sure you don’t overpay tax you don’t owe
🌟 Final Thoughts
Selling your vacation home doesn’t have to be stressful, even with FIRPTA. With the right guidance, many foreign owners qualify for reduced or no withholding, especially when selling to U.S. buyers.
If you’re thinking about selling or are already under contract, reach out early so we can help you navigate FIRPTA and protect your proceeds.
Need Help With FIRPTA or Selling Your Central Florida Vacation Home?
📩 Contact me today to schedule a complimentary consultation.
📞 321 333 1338| 🌐 www.vacayreflorida.com | ✉️ [email protected]