What happens when a federal law freezes part of your sale proceeds and the freeze has nothing to do with whether you actually made money?
That is the question a lot of Sunny Isles Beach sellers ask for the first time at the closing table, usually a few days too late to do anything about it. The Foreign Investment in Real Property Tax Act, known as FIRPTA, requires the buyer to withhold a share of the gross sale price whenever the seller is a foreign person. Not the profit. Not the gain. The gross price. A seller who bought a Collins Avenue condo in 2015, watched it barely appreciate, and is now selling into a slower market can still see six figures held back at the closing table, sometimes far more than the actual tax owed on the sale.
Sunny Isles Beach is a market where this collides with something else worth understanding right now: the resale segment is moving slower than almost anywhere else in Miami's luxury corridor, while the pre-construction towers rising along the same stretch of coastline are not slowing down at all. Selling here in 2026 means understanding both mechanisms at once.
The Withholding Isn't a Tax on Your Profit
FIRPTA is a federal law, not a Florida statute, and it applies whenever the seller of U.S. real estate is a nonresident alien, a foreign corporation, a foreign trust, or a foreign estate. The buyer, not the seller, is legally responsible for withholding the correct amount and sending it to the IRS. If the buyer fails to do it correctly, the IRS can pursue the buyer for the shortfall, which is why title companies and closing attorneys treat this step as non-negotiable.
The rate depends on the sale price and the buyer's intended use of the property:
| Sale price | Buyer's intended use | Withholding rate |
|---|---|---|
| $300,000 or less | Buyer plans to occupy as a residence at least 50% of the time for two years | 0% |
| $300,001 to $1,000,000 | Buyer plans to occupy as a residence at least 50% of the time for two years | 10% |
| Any price above $1,000,000 | Any use | 15% |
| Any price, buyer's use unknown or not residential | Any | 15% |
The number that catches sellers off guard is the base. Withholding is calculated on the amount realized at sale, not on the gain. A seller who paid $2 million for a unit and sells it for $2.1 million has a modest gain, but if the buyer withholds the standard 15 percent, that is $315,000 held back, not a tax proportional to the $100,000 profit.
Why This Lands Harder in Sunny Isles Beach
Look at where Sunny Isles Beach condos actually trade. Current listings on the local MLS as of September 2026 run from roughly $85,000 studios up through $47.5 million penthouses, and active resale inventory at Porsche Design Tower alone ranges from $3.7 million to $14.6 million, averaging $1,800 to $2,200 per square foot for oceanfront units. At those numbers, almost every meaningful sale clears the $1 million threshold that triggers the full 15 percent rate regardless of what the buyer plans to do with the unit. There is no partial-rate cushion for most transactions in this market the way there might be in a $400,000 condo sale elsewhere in the county.
The buyer pool compounds this. Florida's international-buyer data shows 45 percent of foreign purchasers come from Latin America and the Caribbean, 22 percent from Europe, and 17 percent from Northern America, and more than half pay cash. A market this globally sourced on the buy side also tends to be globally sourced on the sell side. Sunny Isles Beach condo and townhome sales generated roughly $1.1 billion in volume in 2025, according to figures reported through the Miami Association of Realtors, at a median price of $741,250. That median sits comfortably above the $300,000 exemption tier and often above the $1 million mark once you factor in ocean-facing product, meaning a large share of the sellers behind those transactions are foreign persons subject to the full withholding rate on the full price, not a reduced one.
Two Clocks That Don't Run at the Same Speed
Here is the part that gets missed. FIRPTA has a relief valve. A seller who expects a small gain, a loss, or an offsetting deduction can apply to the IRS for a withholding certificate using Form 8288-B, which reduces the withholding to match the actual anticipated tax liability rather than the flat 15 percent of gross price. That is the single most useful tool a foreign seller has.
The catch is timing. The IRS can take 90 days or more to process a withholding certificate application. If the certificate has not been issued by the day of closing, the closing agent still withholds the full amount, though the funds can sit in escrow rather than being remitted immediately to the IRS while the application is pending.
Now overlay that 90-day IRS clock onto the local market clock. Luxury condo resales in Sunny Isles Beach averaged 135 to 138 days on market in the stretch from the fourth quarter of 2025 through the first quarter of 2026, the longest of any major Miami luxury submarket, compared with 65 days in Edgewater over the same period. A seller who lists a condo, waits four and a half months for a contract, and only then starts thinking about the 8288-B application has already burned through most or all of the runway the IRS needs to act before closing. The two clocks are not synchronized, and the mismatch is exactly why sellers who wait until they are under contract to ask about FIRPTA end up with cash frozen for months after closing instead of relief before it.
What Actually Happens at the Table
The mechanics, once you know them, are straightforward. In a typical Florida closing involving a foreign seller:
- The seller signs a FIRPTA affidavit stating their tax status, or the closing agent determines foreign status if no affidavit is provided.
- If withholding applies, the closing agent calculates the amount, holds it back from the seller's proceeds, and places it in escrow.
- The closing agent, acting as the withholding agent, has 20 days from closing to file IRS Form 8288 and issue Form 8288-A to the seller as proof of the withholding.
- If a Form 8288-B application was filed before closing and the buyer received notice of it, the funds may stay in escrow pending the IRS decision rather than being sent immediately.
- The seller later files a U.S. nonresident tax return for the year of sale, reports the actual gain, and claims credit for the amount withheld, which can result in a refund.
The refund path works, but it takes a full tax filing cycle. A seller who wants their capital back sooner has one real option: start the withholding certificate process the moment the property goes under contract, not after.
What This Means If You're Selling This Year
Total dollar volume in Sunny Isles Beach luxury real estate rose 13 percent year over year in the most recent annual period even as individual listings sat longer, which tells you the market is absorbing deals at higher prices, just more slowly. Resale condos priced at $5 million and above have in some cases closed at roughly a 10 percent discount to original ask, a sign that sellers anchored to 2022 peak pricing are the ones sitting on unsold inventory while realistically priced listings are moving. Meanwhile buildings like Bentley Residences and the St. Regis Residences are absorbing pre-construction demand without negotiating on price at all.
For a foreign seller, that combination changes the calculus. A softer resale market means more time between listing and contract, which means more time to get a withholding certificate application in front of the IRS before you need it. Sellers who treat FIRPTA planning as a pre-listing task rather than a post-contract scramble are the ones who walk away from closing with proceeds that reflect their actual tax liability instead of a flat 15 percent of the sale price sitting in escrow for months.
A Few Questions Worth Asking Early
Does FIRPTA apply if I sell through an LLC? It depends on who owns the LLC. If a foreign person holds a membership interest, even a minority one in some structures, the entity can still be treated as a foreign seller for withholding purposes. This is worth confirming with a tax advisor before listing, not during escrow.
I'm a U.S. citizen living abroad. Am I subject to this? No. FIRPTA applies to nonresident aliens, foreign corporations, foreign trusts, and foreign estates. U.S. citizens and permanent residents are not subject to FIRPTA withholding regardless of where they currently live, though the seller still needs to provide a non-foreign status affidavit at closing to confirm it.
Can I skip withholding entirely if I know I'm selling at a loss? Not automatically. The default 15 percent still applies unless the IRS approves a withholding certificate before closing or another documented exemption applies. Believing you have a loss is not the same as having IRS paperwork that says so, which is exactly why the Form 8288-B timeline matters.
FIRPTA is federal tax law, not investment advice, and every seller's situation is different enough that a CPA or tax attorney familiar with cross-border transactions should be part of the plan well before a contract is signed.
If you're weighing when to list a Sunny Isles Beach condo, or want a clearer read on what your specific building and price point are actually doing in today's market, Serhii Shulha works with owners across Sunny Isles Beach and the wider Miami metro on exactly this kind of timing. Start with a current home valuation or reach out directly to schedule a consultation before you list.
