FIRPTA Withholding Florida Home Sale Rules: A Guide for Canadian and Other Foreign Sellers

Who is a “foreign person” under FIRPTA, and are Canadian snowbirds included?

A foreign person, for FIRPTA purposes, is a nonresident alien individual, a foreign corporation that does not have a valid election to be treated as a domestic corporation, a foreign partnership, a foreign trust or a foreign estate (IRS Instructions for Form 8288, Rev. January 2026). A Canadian who spends winters in Florida and remains a tax resident of Canada is usually a nonresident alien, and therefore a foreign person, when selling a Florida home.

The status that matters is tax residency, not citizenship, visa type or where the seller keeps a second home. Four groups cover most Florida sellers who ask the question.

The substantial presence test in one paragraph

The substantial presence test is the day-count rule the IRS uses to decide whether a non-citizen is a U.S. tax resident. An individual meets the test by being physically present in the United States at least 31 days in the current year and 183 days during the three-year period that counts all days in the current year, one-third of the days in the first preceding year and one-sixth of the days in the second preceding year (IRS, “Substantial Presence Test,” updated March 14, 2026). The arithmetic matters for seasonal owners: a person present 122 days in each of three consecutive years counts 122 + 40.7 + 20.3 = 183 weighted days, enough to meet the test without ever intending to become a U.S. resident.

The closer connection exception and Form 8840

The closer connection exception lets an individual who meets the substantial presence test still be treated as a nonresident. The IRS lists the conditions: the individual was present in the United States fewer than 183 days during the year, maintained a tax home in one foreign country for the entire year, had a closer connection to that country than to the United States, and had not applied for lawful permanent resident status (IRS, “Closer Connection Exception to the Substantial Presence Test,” updated July 16, 2026). The claim is made on Form 8840, Closer Connection Exception Statement for Aliens. The IRS warns that an individual who does not timely file Form 8840 cannot claim the exception unless the individual shows, by clear and convincing evidence, reasonable steps to comply.

Many Canadian snowbirds file Form 8840 each year precisely so that they remain nonresidents for U.S. tax purposes. That choice has a direct consequence at sale: a seller who is a nonresident alien is a foreign person under FIRPTA, and the buyer must withhold unless an exception applies. A seller’s residency history, and whether Form 8840 was filed in prior years, is the first fact a cross-border accountant will ask for.

Married owners, joint owners and mixed status

When a foreign person and a U.S. person sell a property together, the IRS instructions allocate the amount realized between them based on their capital contributions, and a husband and wife are treated as having contributed 50% each (IRS Instructions for Form 8288, Rev. January 2026). In practice, when a U.S. citizen and a Canadian spouse sell a jointly titled Florida home, the withholding is usually calculated on the foreign spouse’s half only, and the U.S. spouse signs a certification of non-foreign status for the other half. The closing agent applies the rule; the couple’s accountant should confirm the allocation before closing.

Homes owned through an LLC, corporation or trust

Ownership through an entity changes who the “seller” is for FIRPTA. A foreign corporation, foreign partnership, foreign trust or foreign estate is itself a foreign person. A single-member LLC that the tax code disregards is looked through to its owner: under Treasury Regulation 1.1445-2(b)(2)(iii), a disregarded entity “is not the transferor for U.S. tax purposes,” and its owner is treated as the transferor and must provide any certification of non-foreign status. A Florida LLC owned by one nonresident alien is therefore treated as a sale by that nonresident alien, and the seller’s CPA should confirm how the LLC is classified. Sales of interests in partnerships, corporations and trusts follow separate rules that are beyond the scope of a home-seller guide and require a tax adviser before listing.

If any part of this section leaves your status uncertain, settle it with a CPA or tax attorney before you sign a listing agreement, because the answer decides which forms the closing agent will prepare.

Is FIRPTA withholding the tax you actually owe?

No. FIRPTA withholding is a deposit against the seller’s U.S. income tax on the sale, and the actual tax is calculated on a U.S. return. The IRS states that the transferor “must file a U.S. income tax return and attach the stamped Form 8288-A to receive credit for any tax withheld” (IRS, “Reporting and Paying Tax on U.S. Real Property Interests,” updated July 23, 2026). If the withholding is more than the tax, the difference is refunded.

The belief this section corrects

The most common belief among foreign sellers is “FIRPTA takes 15% of my sale.” That belief treats a deposit as a loss. The withholding is calculated on the gross price because the buyer cannot know the seller’s cost, improvements or selling expenses. The seller’s real tax is calculated on the gain: the amount realized minus the adjusted basis (generally the purchase price plus capital improvements) and minus selling expenses. On most resales, 15% or 10% of the gross price is far larger than the tax on the gain.

A worked illustration with hypothetical numbers

The figures below are hypothetical and chosen only to show the arithmetic. They are not a tax calculation for any seller.

In this illustration, the withholding equals about 46% of the gain. A nonresident alien’s gain on U.S. real property is treated as effectively connected income, which is taxed at the same graduated rates that apply to U.S. citizens and residents (IRS Publication 519, 2025). For individuals, the rate on most net capital gain is no higher than 15%, a 20% rate applies above set income thresholds, and unrecaptured section 1250 gain from real property is taxed at a maximum 25% rate (IRS Tax Topic 409, updated September 24, 2026). Those rates are far below 46%, so in this illustration most of the $41,500 would come back; the seller’s CPA calculates the actual figure. If the home had been rented, depreciation recapture can raise the tax, and if the seller sells at a loss, the tax on the sale may be zero. In every case, the gross-price withholding and the actual tax are two different numbers.

Why the deposit still matters

A refundable deposit can still create a real problem. A seller who planned to use the full proceeds to buy a home in Canada, pay off a home equity loan, or fund a move may find a five- or six-figure amount unavailable for months. That timing gap is the reason the withholding certificate in section 5 exists, and the reason the conversation about FIRPTA belongs at the start of the listing, not at the closing table.

When the sale is at a loss

A sale at a loss does not cancel FIRPTA withholding by itself. The buyer must still withhold unless an exception applies or the IRS issues a withholding certificate. A seller who expects a loss, or a gain so small that the tax is less than the withholding, is the strongest candidate for a withholding certificate, because the IRS may issue one when the amount that must be withheld would be more than the seller’s maximum tax liability (IRS, “Withholding Certificates,” updated July 23, 2026).

For the rules on gain, basis and the Section 121 exclusion as they apply to U.S. residents, read the series guide on capital gains on a Florida home sale. The calculation for a nonresident belongs with a CPA or tax attorney experienced in nonresident returns.

Do you need an ITIN before you sell a Florida home?

A foreign seller who has no U.S. Social Security number needs an Individual Taxpayer Identification Number (ITIN) to apply for a withholding certificate and to claim credit for FIRPTA withholding on a U.S. return. An ITIN is a nine-digit tax processing number the IRS issues to individuals who need a U.S. taxpayer identification number but are not eligible for a Social Security number. The IRS says to allow 7 weeks for an ITIN decision, and 9 to 11 weeks during tax season or when applying from overseas (IRS, “How do I apply for an ITIN,” updated February 22, 2026).

How the ITIN and Form 8288-B travel together

The IRS allows a seller who wants to reduce or eliminate FIRPTA withholding to apply for an ITIN by attaching Form 8288-B to Form W-7. On Form W-7 the applicant selects box “h” (other) and writes “Exception 4” next to it, then mails the package to the Internal Revenue Service, Austin Service Center, ITIN Operation, P.O. Box 149342, Austin, TX 78714-9342 (IRS, “ITIN Guidance for Foreign Property Buyers/Sellers,” updated August 13, 2026). If the ITIN application is rejected, the attached withholding certificate application is not processed, so the identity documents must be complete the first time.

What happens without an ITIN

A seller can close without an ITIN, but the path back to the money is slower. The IRS stamps Copy B of Form 8288-A and sends it to the seller; that stamped copy is the seller’s proof of the credit. When no TIN appears on the form, the seller must attach “substantial evidence of withholding (for example, closing documents)” and a statement with the information required on Forms 8288 and 8288-A to the return (IRS, “Reporting and Paying Tax on U.S. Real Property Interests,” updated July 23, 2026). The IRS separately instructs a foreign person without a TIN and without a stamped Form 8288-A who wants the FIRPTA credit to request an ITIN. In short, the seller will need an ITIN eventually; obtaining it with the withholding certificate application avoids doing the work twice.

What a seller can prepare before the contract

• A valid passport, or the combination of identity documents the W-7 instructions accept, ready to be certified or presented as the IRS requires.
• The closing statement from the original purchase of the Florida home.
• Receipts and permits for capital improvements, such as a new roof, impact windows or a pool.
• Records of rental income and depreciation claimed on prior U.S. returns, if the home was ever rented.
• The name of a CPA or tax attorney who prepares nonresident returns and Forms 8288‑B.
• Copies of any Form 8840 filed in prior years, which document the seller’s nonresident status.

A seller who already holds an ITIN should confirm it is still active before listing; the IRS states that “if an ITIN isn’t used on a U.S. federal tax return for any 3 consecutive tax years, it expires on December 31 after the third tax year of non-use” (IRS, “How to renew an ITIN,” updated November 17, 2025). For document and filing questions, the seller’s tax adviser and the IRS instructions for Form W-7 are the authorities.

If you are coordinating the whole sale from another state or country, the series guide on selling a Florida home from out of state covers access, showings, repairs and remote signing in more detail.

What happens at a Florida closing when the seller is foreign?

At a Florida closing with a foreign seller, the closing agent determines the seller’s FIRPTA status, calculates the withholding, deducts it from the seller’s proceeds on the settlement statement, and either sends it to the IRS with Forms 8288 and 8288-A within 20 days or holds it in escrow while a withholding certificate application is pending. Everything else about the closing, including title, deed and recording, follows ordinary Florida practice.

The contract already addresses FIRPTA

The Florida Realtors/Florida Bar AS IS Residential Contract for Sale and Purchase (form ASIS-7x, updated in 2026) is a standard resale contract widely used by Florida listing agents. Paragraph 10(i) requires the seller to inform the buyer in writing if the seller is a “foreign person” and warns that FIRPTA “may require Seller to provide additional cash at Closing.” STANDARD V, “FIRPTA TAX WITHHOLDING,” states that if a seller of U.S. real property is a “foreign person” as defined by FIRPTA, Section 1445 of the Internal Revenue Code requires the buyer to withhold up to 15% of the amount realized by the seller and remit it to the IRS, unless an exemption applies or the seller has obtained a withholding certificate from the IRS authorizing a reduced amount. The provision means FIRPTA is a known term of the deal from the moment the contract is signed. A seller cannot negotiate it away, and a buyer’s agent who learns of a foreign seller late will reasonably ask how the closing agent intends to handle it.

The certification of non-foreign status

A certification of non-foreign status, often called a FIRPTA affidavit, is a statement the seller signs under penalties of perjury that the seller is not a foreign person, with the seller’s name, U.S. taxpayer identification number and address (IRS, “Exceptions from FIRPTA Withholding,” updated July 15, 2026). Every Florida seller is asked to sign one or explain why not. A foreign seller must not sign it. The IRS notes that a certification is ineffective if the buyer has actual knowledge, or receives notice, that it is false, so a false certification exposes both the seller and the buyer.

The settlement statement line

On the seller’s settlement statement, FIRPTA withholding appears as a deduction from the seller’s proceeds, next to the mortgage payoff, prorated property taxes, documentary stamp tax on the deed, title charges and any commission. Commission is negotiable and is set in the listing agreement. Documentary stamp tax is Florida’s excise tax on documents that transfer real property; on a deed it is 70 cents per $100 of consideration outside Miami-Dade County (Florida Department of Revenue, accessed October 2026), which is $2,905 on a $415,000 sale. Under Paragraph 9(a) of the FR/BAR AS IS contract, “documentary stamp taxes and surtax on deed, if any” are listed among the costs to be paid by the seller, although Florida law makes all parties to the document liable for the tax regardless of which party agrees to pay it (Florida Department of Revenue). For the full list of seller costs, see Port St. Lucie seller closing costs and the seller net proceeds guide.

Signing the deed from Canada or another country

A foreign seller does not have to fly to Florida to close. Florida law allows a deed signed outside the United States to be acknowledged before a notary public of that foreign country with an official seal, a commissioner of deeds appointed by the Florida Secretary of State, or a U.S. ambassador, consul, vice consul or other U.S. diplomatic or consular officer (s. 695.03(3), Florida Statutes, 2026). Florida also requires a deed to be signed in the presence of two subscribing witnesses, who may be present physically or through audio-video communication technology as the statute permits (s. 689.01, Florida Statutes, 2026). The closing agent sends the signing package, specifies how the witnesses and acknowledgment must appear, and receives the originals by courier.

Some foreign sellers sign a power of attorney so that a trusted person in Florida can sign at closing. Under s. 709.2105(2), Florida Statutes, a power of attorney “must be signed by the principal and by two subscribing witnesses and be acknowledged by the principal before a notary public or as otherwise provided in s. 695.03.” Ask the closing agent early what else it requires for a power of attorney signed abroad, such as an advance copy for review or the original at closing, and have a Florida real estate attorney prepare or review the document.

Wiring the proceeds and the withheld funds

The seller’s net proceeds go by wire to the account the seller provides to the closing agent through a verified channel. The withheld amount does not go to the seller; it goes to the IRS or into escrow. A seller should confirm wiring instructions by a phone call to a known number at the title company, never by replying to an emailed change of instructions. Questions about currency conversion and transfer fees belong with the seller’s bank.

For contract, deed and power of attorney questions specific to your sale, consult a Florida real estate attorney.

What should Canadian sellers of Florida homes do differently?

Canadian sellers of Florida homes should plan for two tax systems at once: FIRPTA withholding and a Form 1040-NR on the U.S. side, and reporting the sale on the Canadian return with a foreign tax credit on the Canadian side. The Canada Revenue Agency allows a federal foreign tax credit when a resident of Canada “paid foreign income or profit taxes on income you earned outside Canada and reported on your Canadian tax return,” calculated on Form T2209 (Canada Revenue Agency, line 40500, updated August 14, 2026).

Five decisions that are specific to Canadian owners

1. Residency status for the year of sale. A Canadian who has filed Form 8840 each year to claim a closer connection to Canada is a nonresident alien and a foreign person for FIRPTA. A Canadian who spent enough days in Florida to meet the substantial presence test and did not file Form 8840 may be a U.S. tax resident for that year, which changes the analysis entirely. The cross-border accountant should settle this before listing.
2. Records in two currencies. The U.S. return calculates the gain in U.S. dollars. The Canadian return calculates it in Canadian dollars: the Canada Revenue Agency says to convert the proceeds at the exchange rate in effect at the time of the sale, the adjusted cost base at the rate in effect when the property was acquired, and outlays and expenses at the rate in effect when they were incurred (Canada Revenue Agency, “Calculating and reporting your capital gains and losses,” modified February 5, 2026). Keeping the date and amount of each purchase, improvement and sale cost lets the Canadian tax adviser apply those rates.
3. Whether the home was ever rented. Rental income, U.S. rental filings and depreciation affect the U.S. gain and the maximum tax liability on Form 8288-B. An owner who rented the home seasonally should bring those records to the accountant at the start.
4. Where the proceeds are going. A Canadian seller who needs the Florida proceeds to close on a home in Canada should compare the Florida closing date with the IRS 90-day window and the Canadian closing date, and decide early whether to apply for a withholding certificate.
5. How and where to sign. Under s. 695.03(3), Florida Statutes, a Canadian notary public with an official seal can take the acknowledgment on a deed signed in Canada, and Florida’s two-witness rule still applies. The closing agent’s instructions control the format.

What the U.S.-Canada tax treaty does and does not do here

The tax treaty between the United States and Canada coordinates which country taxes what and how double taxation is relieved. For a Florida home, Article XIII(1) of the treaty provides that “gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State,” so the United States may tax a Canadian resident’s gain on the sale. On the Canadian side, the sale is reported on the Canadian return and the seller may claim a federal foreign tax credit for the U.S. tax paid, calculated on Form T2209. How these rules apply to a particular seller is a question for a cross-border tax adviser. The treaty does not switch off FIRPTA withholding at closing. Only an exception or a withholding certificate does that.

What Canadian clients have said about working with Jeannie Jacobson

Jeannie Jacobson has represented Canadian clients in Florida transactions. The review below was written by Canadian buyers, not sellers, and is shown because it describes how she handles cross-border questions she does not answer herself.

“As Canadian buyers, Jeannie walked us through the process of purchasing Florida real estate, making it as painless as possible. Even when Jeannie doesn't have the answer, she will always try to connect you with someone who does. She was always available and help us close on a complicated transaction. We really appreciated her expertise.”

— JoAnna Brunnenmeir · Zillow review · 3 years ago

For a Canadian owner selling a seasonal home in Tradition, St. Lucie West or elsewhere in Port St. Lucie, Jeannie Jacobson prepares the pricing analysis, the pre-listing plan and the contract timeline, and connects the seller with the closing agent; the seller’s cross-border accountant handles Form 8288-B, the ITIN and both returns. Owners who first came to Florida as seasonal residents may also find context in the snowbird guide to seasonal homes in Port St. Lucie. For Canadian and U.S. tax questions on your sale, consult a cross-border CPA or tax attorney.

Which FIRPTA mistakes delay a Florida closing, and how do you avoid them?

Most FIRPTA delays on Florida closings come from information arriving late: a seller’s foreign status disclosed after the contract, an ITIN application started at closing, or a withholding certificate application filed without complete records. Each one is avoidable when the seller, the listing agent, the closing agent and the accountant start from the same timeline.

The exceptions that rarely apply to a home sale

The IRS lists ten exceptions from FIRPTA withholding (IRS, “Exceptions from FIRPTA Withholding,” updated July 15, 2026). For an individual selling a Florida home, only a few are practical: the residence exception at $300,000 or less, a certification of non-foreign status when the seller is in fact a U.S. person, a withholding certificate from the IRS, and a zero amount realized. A written notice of nonrecognition can apply when no gain or loss is recognized under a nonrecognition provision or treaty, and the IRS requires a copy to be filed with the Ogden Service Center by the 20th day after the transfer. Whether any of these fit a specific sale is a question for a tax adviser, not a listing agent.

A short checklist for the listing appointment

• Seller’s citizenship and residency status for the year of sale, confirmed with a tax adviser.
• Whether the seller has a Social Security number or an active ITIN.
• Original purchase closing statement, improvement records and permits.
• Rental history and depreciation, if any.
• Preferred closing agent and its process for FIRPTA escrow.
• The seller’s need for proceeds by a certain date, such as a purchase in another country.
• HOA, condo or CDD documents that could move the closing date.

For buyer-agent compensation questions that also appear on a foreign seller’s settlement statement, see who pays the buyer’s agent in Florida. For more seller tools, visit seller resources, or read about home seller representation across the Treasure Coast and Palm Beach County. For FIRPTA decisions on your own sale, consult a CPA or tax attorney experienced in nonresident returns.