FIRPTA, LLCs and Trusts: How International Buyers Should Hold a South Florida New-Development Condo

FIRPTA does not tax a foreign buyer at purchase — it takes effect at exit, when the IRS generally requires 15 percent of the gross sale price to be withheld from a foreign seller. The ownership structure chosen before signing a pre-construction contract determines that withholding exposure, U.S. estate-tax risk on a $60,000 exemption, privacy, and annual carrying costs. For international buyers reserving units in South Florida’s new towers, structuring is the first decision, not an afterthought. This guide covers the rules as of August 2026 — including a major FinCEN change — and pairs naturally with our foreign buyer’s guide to South Florida luxury condos.

What is FIRPTA and when does the 15% withholding apply?

The Foreign Investment in Real Property Tax Act requires the buyer in a sale by a foreign person to withhold, per IRS guidance current as of August 2026, 15 percent of the amount realized — the gross price, not the gain — and remit it to the IRS within 20 days of closing on Form 8288. It is a prepayment of the seller’s capital-gains tax, not an extra tax.

Two statutory relief bands exist under Internal Revenue Code Section 1445, per the IRS: withholding drops to zero when the price is $300,000 or less and the buyer (an individual) will use the property as a residence for at least half of its occupied days in each of the first two 12-month periods; it drops to 10 percent when the price exceeds $300,000 but not $1,000,000 under the same residence-use test. In the luxury new-development market, where entry pricing routinely clears seven figures, most foreign sellers face the full 15 percent unless they obtain an IRS withholding certificate on Form 8288-B reducing the amount to the actual tax liability.

Note what this means for a new-development buyer: FIRPTA is irrelevant when purchasing from a U.S. developer, because the seller is not foreign. It becomes the buyer’s own problem years later at resale — including a pre-completion contract assignment, where the economics of staged pre-construction deposits can leave a thin margin from which 15 percent of the gross assignment price must still be withheld.

Should a foreign buyer purchase in an LLC or personally?

Direct personal ownership is the simplest and cheapest structure, but it exposes a nonresident’s estate to U.S. estate tax above a $60,000 threshold and puts the buyer’s name on the public record. A single-member Florida LLC adds liability protection and title privacy at modest annual cost — yet, because it is disregarded for tax purposes, it changes neither FIRPTA nor estate-tax exposure.

The estate-tax stakes are severe and widely underestimated. Per the IRS instructions for Form 706-NA (Rev. September 2025), a nonresident non-citizen’s estate must file whenever U.S.-situated assets plus adjusted taxable gifts exceed just $60,000, with graduated rates running from 18 percent to a top rate of 40 percent and a unified credit capped at $13,000 — against the $15,000,000 basic exclusion available to U.S. citizens in 2026. Portability of a spouse’s unused exclusion is not available to these estates, per the IRS. A $10 million Brickell condo held personally, or through a disregarded single-member LLC, sits squarely inside that net.

Privacy improved materially this year. On August 11, 2026, FinCEN announced a final rule permanently exempting U.S. companies and U.S. persons from beneficial-ownership reporting under the Corporate Transparency Act; only foreign reporting companies registered to do business in the U.S. must still report their foreign beneficial owners, per FinCEN. A Florida LLC therefore no longer files federal beneficial-ownership reports, restoring much of the anonymity that drew buyers to the structure before 2024.

What does a trust structure change?

A properly designed irrevocable trust — typically a foreign non-grantor trust or a U.S. domestic trust settled by the foreign buyer — can remove the condo from the buyer’s U.S. taxable estate entirely, sidestepping the $60,000 exemption problem. The trade-offs are loss of direct control, complex drafting, and meaningful setup and annual administration costs.

The mechanics matter: the trust must be genuinely irrevocable and the settlor’s retained powers tightly limited, or the IRS can pull the asset back into the estate. A revocable trust, by contrast, achieves probate avoidance but no estate-tax benefit. Trusts also intersect with FIRPTA — a foreign trust selling U.S. real property is a foreign person subject to withholding, and per the IRS, certain distributions of U.S. real property interests by foreign corporations and trust structures carry a 21 percent withholding on recognized gain. Some families instead layer a foreign corporation over a U.S. entity; that blocks estate tax but converts sale profits to corporate rates, forfeits the individual long-term capital-gains treatment, and adds two layers of annual compliance. This is precisely the analysis to complete alongside the developer’s paperwork — see our South Florida pre-construction contract guide.

What does each structure cost to maintain annually?

Direct ownership costs nothing to maintain beyond tax filings. A Florida LLC pays the state’s $138.75 annual-report fee (Florida Division of Corporations, due May 1) plus registered-agent and return-preparation costs. Corporate blockers add federal corporate filings in two jurisdictions, and irrevocable trusts carry trustee and fiduciary-return fees — typically the most expensive structure to run.

These carrying costs sit on top of the ownership costs every buyer models — see our guide to HOA fees at South Florida luxury new developments. One more line item is structural: Florida documentary stamp tax on the deed runs $0.70 per $100 of consideration statewide — in Miami-Dade County, $0.60 per $100 plus a $0.45 per $100 surtax on transfers other than a single-family residence — per the Florida Department of Revenue. Later moving a property into an entity for consideration can trigger doc stamps a second time, which is a core reason to settle the structure before closing, not after.

One benefit foreign buyers should not model: Florida’s homestead exemption and Save Our Homes cap generally require permanent Florida residency, which most nonresident purchasers cannot claim — the details are in our homestead exemption guide for luxury buyers.

What should buyers settle before signing the pre-construction contract?

Decide the vesting entity, form it, and name it in the purchase agreement before reservation converts to hard contract. Confirm the contract’s assignment clause permits transfer to an affiliated entity, obtain a U.S. taxpayer identification number early, and stress-test the structure against both a resale during construction and a death before completion.

Developers vary widely on whether they will retitle a contract from an individual to an LLC or trust mid-stream, and some charge transfer fees or refuse outright. Signing in the wrong name can lock in years of avoidable exposure across a 2026–2030 delivery cycle — worth reading alongside our guide to reading completion risk in South Florida pre-construction and the 2026–2030 delivery calendar.

Ownership structure comparison for a nonresident buyer of a South Florida new-development condo (rules as of August 2026; withholding rates per IRS, estate figures per IRS Form 706-NA instructions)

Structure	FIRPTA withholding at resale	U.S. estate-tax exposure	Privacy	Annual upkeep
Individual (direct)	15% of gross price (10% or 0% only under the ≤$1M / ≤$300k residence-use bands)	High — $60,000 filing threshold; rates 18–40%	Low — name on deed	Minimal — tax filings only
Single-member Florida LLC	Same as individual — entity is disregarded; 15% standard	High — same as individual	Moderate–high — entity on deed; no federal BOI reporting for U.S. companies per FinCEN (Aug. 11, 2026 final rule)	Low — $138.75 state annual report plus agent and tax prep
Foreign corporation (or blocker)	Corporate-level rules; 21% withholding on gain for certain distributions per IRS	Generally removed from individual estate	High	Higher — two-jurisdiction corporate compliance
Irrevocable trust	Foreign trust remains subject to FIRPTA at sale; structure-dependent	Can be eliminated if properly drafted	High — trustee on title	Highest — trustee and fiduciary-return fees

Frequently Asked Questions

Does FIRPTA apply when a foreign buyer purchases from a U.S. developer?

No. FIRPTA withholding applies to dispositions by foreign persons. Buying a new unit from a domestic developer triggers no withholding; the foreign owner’s exposure arises later, when they sell.

What is the standard FIRPTA withholding rate in 2026?

15 percent of the amount realized — the gross sale price — per IRS guidance current as of August 2026, remitted with Form 8288 within 20 days of the transfer.

When does the 10 percent or 0 percent rate apply?

Per the IRS: 0 percent when the price is $300,000 or less, and 10 percent when it exceeds $300,000 but not $1,000,000 — in both cases only if an individual buyer will use the property as a residence for at least 50 percent of its occupied days in each of the first two 12-month periods.

Can withholding be reduced below the statutory rate?

Yes. A seller may apply for an IRS withholding certificate on Form 8288-B before closing, which can reduce withholding to the actual expected tax on the gain.

Does a single-member LLC protect a foreign owner from U.S. estate tax?

No. A single-member LLC is disregarded for federal tax purposes, so the condo is treated as owned directly by the individual — inside the estate-tax net above the $60,000 threshold per IRS Form 706-NA instructions.

How much U.S. estate tax exemption does a nonresident get?

Effectively $60,000 of U.S.-situated assets, via a unified credit capped at $13,000, per the IRS Form 706-NA instructions (Rev. September 2025) — versus a $15,000,000 basic exclusion for U.S. citizens in 2026. Portability between spouses is unavailable.

Do Florida LLCs still file beneficial-ownership reports with FinCEN?

No. FinCEN’s final rule announced August 11, 2026 permanently exempts U.S. companies and U.S. persons from Corporate Transparency Act reporting; only foreign reporting companies must still report their foreign beneficial owners.

What are Florida documentary stamp taxes on a condo deed?

$0.70 per $100 of consideration statewide; in Miami-Dade County, $0.60 per $100 plus a $0.45 per $100 surtax on transfers other than a single-family residence, per the Florida Department of Revenue.

Can I move my condo into an LLC or trust after closing?

Often yes, but a transfer for consideration can trigger documentary stamp tax again, may require lender consent, and — for estate planning — later transfers can be less effective than acquiring in the right structure from day one.

Structure first, sign second. To see which towers are launching, topping out, and delivering across Miami, Fort Lauderdale, and the Palm Beaches, explore Haute Residence’s complete coverage of South Florida new developments.

This article is general information, not tax or legal advice. Consult a qualified cross-border tax attorney before structuring a purchase.