What is FIRPTA and when does it apply to 30A property sales?

FIRPTA is a federal tax withholding rule that may apply when a foreign person sells real estate in the United States, including property along 30A. It is not an extra tax on the sale. Instead, a portion of the seller’s proceeds is withheld at closing and sent to the IRS as a credit toward any U.S. tax the seller may owe.

In many cases, the withholding is 15 percent of the sales price, not just the seller’s profit. FIRPTA can apply to foreign individuals, corporations, partnerships, trusts, and estates selling a vacation home, rental property, land, or investment property.

There are exceptions and possible reductions, particularly when the buyer plans to use the property as a primary residence or when the seller applies to the IRS for a withholding certificate. Because the buyer can be held responsible if FIRPTA is missed, it is important to identify it early in the transaction.

Luke Andrews helps buyers and sellers navigate these details with confidence. His experience in 30A real estate and new development allows him to recognize potential FIRPTA issues early and coordinate with title and tax professionals for a smooth closing.