What happens if the seller of a Space Coast home is a foreign person?
Under FIRPTA, the buyer of a Brevard County, Florida property generally has to withhold 15 percent of the sale price and send it to the IRS. The obligation sits on the buyer, not the seller, which is why it catches people off guard.
The Space Coast has always drawn out-of-country ownership. Canadian snowbirds who bought a Cocoa Beach condo in the 2000s, a family in the UK who kept a place in Satellite Beach, an investor who picked up a Melbourne rental and never set foot in Florida. Eventually those owners sell, and the buyer inherits a federal tax obligation nobody mentioned during the showing.
This is not a reason to walk away from a property. It is a reason to know the rule before you write the offer, because the person legally on the hook for getting it right is you.
What is FIRPTA, and why does it land on the buyer?
FIRPTA is the Foreign Investment in Real Property Tax Act of 1980. It exists to make sure the United States actually collects tax when a foreign person sells U.S. real estate, since the IRS has limited ability to chase someone who has already left the country with the proceeds.
The mechanism is withholding. The IRS calls the buyer the transferee, and in most transactions the transferee is the withholding agent. Per the IRS, a withholding agent is personally liable for the full amount required to be withheld, plus penalties and interest. That sentence is the entire reason this post exists.
How much gets withheld on a Brevard County FL sale?
The general rate is 15 percent of the amount realized, which for most Space Coast transactions means 15 percent of the gross sale price, not 15 percent of the seller's profit. There are important carve-outs:
| Scenario | General treatment |
|---|---|
| Seller certifies they are not a foreign person | No FIRPTA withholding required |
| Buyer will use it as a residence, price $300,000 or less | Exception may apply, no withholding |
| Buyer will use it as a residence, price above $300,000 up to $1 million | A reduced rate may apply; confirm the current rate with a CPA |
| Everything else | 15 percent of the amount realized |
The $300,000 residence exception has real teeth in it. The IRS requires that the buyer be an individual, and that the buyer or a family member have definite plans to reside at the property for at least 50 percent of the days the property is used by anyone during each of the first two 12-month periods after transfer. Vacant days do not count against you. Buying a Cocoa Beach condo you plan to rent out most of the year does not qualify.
The certification of non-foreign status
Most Space Coast closings never touch FIRPTA at all, because the seller signs a certification, under penalties of perjury, stating that they are not a foreign person. That certification includes the seller's name, U.S. taxpayer identification number, and address.
The IRS also allows a qualified substitute to hold that certification, with a statement going to the buyer confirming the certification exists. A qualified substitute is the person responsible for closing the transaction, other than the seller's agent, or the buyer's agent.
One warning worth repeating in Brevard County: a certification is not effective if the buyer has actual knowledge that it is false. Signing a form does not cure a fact you already knew.
What if 15 percent is more than the seller actually owes?
That happens constantly. A foreign owner who bought a Melbourne house years ago and is selling with a modest gain can easily owe far less tax than 15 percent of the sale price. The fix is a withholding certificate.
The seller or buyer files Form 8288-B with the IRS to request reduced or zero withholding. If the application is filed on or before the date of the sale and is still pending at closing, the statutory amount still has to be withheld, but it does not have to be paid to the IRS immediately. It gets reported and paid within 20 days after the IRS mails the certificate or a denial.
Timing is the whole game here. Form 8288-B takes the IRS time to process, so this belongs in the conversation when the contract is written, not the week of closing on a Space Coast property.
How the money actually gets reported
Withheld funds are reported on Form 8288 with Form 8288-A attached, generally filed by the 20th day after the disposition. The IRS stamps a copy of Form 8288-A and sends it to the seller, who attaches it to a U.S. income tax return to get credit for the amount withheld and to claim any refund.
The IRS page on reporting and paying tax on U.S. real property interests spells out the mechanics. One practical note: the seller will not get a stamped copy without a U.S. taxpayer identification number on the form, which is why an ITIN application often has to happen alongside the sale.
What Space Coast buyers should actually do
- Ask early whether the seller is a U.S. person. It is a normal question, not a rude one.
- If the answer is no, get a CPA involved while you are still in your inspection period.
- Confirm with your closing agent how FIRPTA will be handled at your Brevard County closing and who is filing what.
- Do not assume the closing agent automatically handles the withholding. Confirm it in writing.
Frequently asked questions
Does FIRPTA apply to a Canadian selling a Cocoa Beach condo?
It can. FIRPTA turns on whether the seller is a foreign person for U.S. tax purposes, not on which country they hold a passport from or how long they have owned on the Space Coast. A Canadian who is a U.S. tax resident may not be a foreign person. A CPA is the right person to make that call.
Who is responsible if the withholding is missed at a Brevard County closing?
The IRS holds the withholding agent personally liable for the full amount, plus penalties and interest. In a standard residential transaction that is generally the buyer. That is why this is worth confirming before closing rather than assuming someone else has it covered.
Does FIRPTA mean the foreign seller loses that money?
No. Withholding is a prepayment, not a tax. The seller files a U.S. return, applies the withheld amount against the actual tax owed, and gets a refund of the difference. The friction is timing, not permanent loss.
None of the above is tax advice, and I am not a CPA. It is the map so you know what to ask and who to ask. If you are buying on the Space Coast and the title work turns up an out-of-country seller, that is a solvable situation with the right people at the table. My partner Nichole and I got your back. Reach out anytime at (321) 212-7676 or www.livingspacecoast.com.
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