FIRPTA Explained for Canadian Sellers | How the 15% Withholding Works on a Florida Home Sale

You found a buyer for your St. Petersburg condo. Then the title company tells you 15% of the sale price is going to the IRS. For a Canadian seller, FIRPTA withholding can lock up six figures on a single closing.

The good news: FIRPTA withholding is a prepayment, not your final tax bill. Most sellers can shrink it, and the excess comes back. By the end of this guide, you'll know which rate applies to your sale, how to request a lower amount, and what to file on both sides of the border.

You're in good company. Canadians made up 33% of all international clients who sold Florida property in the latest survey year, nearly double their 18% share of international buyers, according to the Florida Realtors 2025 Profile of International Residential Transactions. The same report ranks Tampa-St. Petersburg-Clearwater second in the state for international sellers, at 12%.

This guide is general information, not tax or legal advice. Work with a cross-border CPA on your specific sale.

What Is FIRPTA Withholding?

FIRPTA (the Foreign Investment in Real Property Tax Act) requires anyone buying US real estate from a foreign seller to withhold 15% of the gross sale price and send it to the IRS. It applies even if you sell at a loss. The seller then files a US tax return to settle the real tax owed and recover any overpayment.

It's 15% of the price, not your profit. And if the buyer fails to withhold, the IRS can hold the buyer liable for the tax. That's why no closing agent will skip it.

The Three FIRPTA Withholding Rates on a Florida Sale

Your rate depends on two things: the price, and whether the buyer will live in the home. Per the IRS exceptions guidance:

1. 0% (the FIRPTA exemption): The price is $300,000 or less and the buyer will use it as a residence.
2. 10%: The price is over $300,000 but not over $1,000,000, and the buyer will use it as a residence.
3. 15%: The price is over $1,000,000, or the buyer is an investor or second-home buyer at any price.

"Use it as a residence" has a strict meaning. The buyer or a family member must have definite plans to live there at least 50% of the days the home is used, in each of the first two years.

Married couples, note this one. The IRS applies the $300,000 test to the total price, not each owner's share. Two spouses selling a $400,000 condo don't each get the exemption (IRS FIRPTA FAQ, Question 17).

On St. Pete's waterfront, most luxury sales clear $1 million. Plan for the full 15%.

Example: Waiting for a Refund vs. Filing Early

Consider an illustrative Toronto couple selling their Snell Isle condo for $1,200,000. They bought it in 2015 for $700,000.

At 15%, the closing agent holds back $180,000. Say their cross-border CPA estimates their actual US tax at about $63,000. With no planning, roughly $117,000 sits with the IRS until they file a US return after year-end and the refund is processed.

With a withholding certificate filed before closing, the IRS can approve withholding close to that $63,000. The difference goes to them, not a refund queue.

Withholding Certificate (Form 8288-B): Pros and Cons

Pros

• Withholding can drop to your estimated actual tax instead of 15% of the price.
• You get the excess within months of closing, not after next year's tax season.

Cons

• The full 15% still sits in escrow while the IRS reviews. The IRS normally acts within 90 days of a complete application.
• You need a US taxpayer number (ITIN), and you can only apply for one once you have a binding contract.
• It adds CPA fees, which make less sense when your gain is small.

How to Handle FIRPTA, Step by Step

1. Before listing, pull your records. Original closing statement, improvement receipts, and any depreciation claimed on rentals.
2. Hire a cross-border CPA early. One who files both US nonresident (Form 1040-NR) and Canadian returns.
3. Tell your agent and title company you're a foreign seller. Don't sign a certification of non-foreign status. That form is for US persons.
4. Once under contract, file Form W-7 and Form 8288-B together. The IRS processes a bundled ITIN request within 10 days. List your closing agent in Box 5 so the decision reaches them on time.
5. At closing, the money is held. If your application is pending, the title company escrows the 15%. Otherwise the buyer sends it in with Forms 8288 and 8288-A within 20 days.
6. Keep the stamped Copy B of Form 8288-A. You attach it to your US return to get credit for the withholding.
7. File Form 1040-NR for the year of sale. This is where your real US tax is calculated. Our guide to Capital Gains Tax on a Florida Home Sale walks through how that gain is figured.

If you're weighing a sale, our seller team can bring your CPA and title company into the timeline from day one.

Selling US Property as a Canadian: The Canadian Return

Canada taxes residents on worldwide income, so the sale goes on your T1 too. Half of the gain is taxable, since Ottawa cancelled the proposed two-thirds inclusion rate in March 2025.

You then claim a foreign tax credit on Form T2209 for the US tax you actually paid. The key word is paid. The credit is based on your final US tax from the 1040-NR, not the 15% withheld. That's why the US return comes first.

Two more points. The Section 116 clearance certificate is a Canadian rule for non-residents selling Canadian property, so it doesn't apply to your Florida sale. And the US measures your gain in US dollars while Canada measures it in Canadian dollars at historical exchange rates, so the two numbers rarely match. Your CPA should run both.

4 FIRPTA Mistakes That Cost Canadian Sellers

1. Learning about FIRPTA at closing. Too late to get a certificate in place.
2. Assuming a loss means no withholding. Without a certificate, 15% applies anyway.
3. Never filing the 1040-NR. No US return, no refund.
4. Assuming the treaty waives FIRPTA. The Canada-US treaty lets the US tax gains on US real estate. Relief comes through the foreign tax credit, not at closing.

The Bottom Line on FIRPTA Withholding in Florida

For a Canadian seller, FIRPTA withholding in Florida is a deposit, not a penalty. Planning decides how big it is and how fast the excess comes back. Start the paperwork 60 to 90 days before you list, build your CPA into the timeline, and choose a listing team that has handled foreign-seller closings before.

Selling your Tampa Bay home from Canada? Contact Eagan Luxury to map out your sale before you list.