The 15% Surprise at the Closing Table
Here is the moment that catches snowbird sellers off guard. The contract is signed, the buyer is happy, and then the title company mentions that because you are a foreign seller, federal law requires the buyer to hold back 15% of the gross sale price and send it to the IRS. Gross means gross. The withholding runs on the full price, not on your profit, so it applies even when your actual gain is modest and even when you are selling at a loss.
Being Canadian does not exempt you. The US-Canada treaty expressly leaves the United States free to tax a Canadian's gain on US real property, so the withholding machinery applies to a retiree from Burlington, Ontario exactly as it does to any other foreign owner. There are two softer tiers, and both ride on the buyer's plans rather than yours. Withholding drops to 10% when the price is between $300,001 and $1,000,000 and the buyer will use the property as a residence, and it disappears entirely at $300,000 or less with buyer-residence use. The full rules, the buyer's own legal duty, and the edge cases live on our FIRPTA withholding guide. What this page adds is the Canadian wrapper, namely how to keep your money, the tax return Canada still expects, and what changes when a death is part of the story. For the rest of the snowbird picture, start at our Canadian snowbird hub.
Getting the Money Back, or Never Losing It
The withholding is not the tax. It is a deposit, and the real tax on your gain is usually far smaller. The question is whether you fix the gap before closing or after, and the difference is measured in months.
Before closing, the Form 8288-B withholding certificate. Filed with the IRS on or before the closing date, it shows your purchase price, the sale numbers, and the actual expected tax, and asks that the withholding be capped at that figure. While the application is pending, the withheld funds commonly sit in the closing agent's escrow rather than going to the IRS, because the buyer's payment deadline is paused until the IRS answers, generally within about 90 days of a complete application. When the certificate arrives, the escrow sends the IRS the certified amount and wires you the rest, weeks after closing instead of a year.
After closing, the refund return. If the full 15% went in at closing, you recover the excess by filing a US return for the year of the sale, Form 1040-NR for an individual, with the IRS-stamped Form 8288-A the buyer's filing generates attached as proof of the withholding. It works reliably, but the return cannot go in until the next filing season and processing takes months on top of that, with your money earning nothing at the IRS the whole time. The buyer-side paperwork, the 20-day filing deadline, and the escrow mechanics are laid out step by step on our Form 8288, 8288-A, and 8288-B guide.
The ITIN Most Canadian Sellers Do Not Have
Every path above eventually asks for a US taxpayer identification number, and most Canadian snowbirds have never needed one. The 8288-B application wants it, the stamped 8288-A credit hangs on it, and the refund return requires it. The fix is an ITIN, applied for on Form W-7 under the exception lane the IRS provides for real estate sales, so the sale itself is the qualifying reason. The application can travel with the Form 8288-B or with the closing paperwork.
The catch is the calendar. An ITIN takes roughly seven to eleven weeks to issue. Started the week the contract is signed, it resolves quietly in the background. Started at closing, it becomes the reason your stamped form sits at the IRS and your refund return cannot be filed. We shepherd the W-7 as part of the sale plan, and the mechanics are covered in the ITIN section of the Form 8288 guide. If your spouse is on the deed too, remember that each seller needs their own number and their own share of the paperwork.
A Florida sale on the horizon?
The 8288-B window and the ITIN clock both run from the contract date. A free 30-minute consult puts the sequence in order while every option is still open.
Book your free consultThe Canadian Side of the Same Sale
Clearing the US side does not finish the job. As a Canadian resident you are taxed at home on your worldwide income, so the same gain goes on your Canadian return, and the treaty lets Canada credit the US tax you actually paid so the two systems mostly do not stack.
One wrinkle deserves a warning, because it surprises even careful sellers. The two countries measure the gain in different money. The US computes your gain in US dollars, translating what you paid at the exchange rate when you bought and what you received at the rate when you sold. Canada runs the same computation in Canadian dollars. After a decade of exchange-rate movement, a condo can show a healthy US-dollar gain and a smaller Canadian-dollar gain, or the reverse, and the foreign tax credit only offsets where the two taxes overlap. The concept is worth knowing before you set expectations for the net proceeds; the actual Canadian computation, any foreign-property reporting that applied while you owned it, and the credit claim belong with your Canadian accountant. We coordinate with them and handle the US and Florida side.
Selling Because Someone Died, or to Settle the Estate
Many snowbird sales are not really real estate decisions. They happen because a spouse died, or because a couple is simplifying an estate the children do not want to manage from Toronto. In those sales, the order of operations matters more than the FIRPTA math.
If the property is still titled in the deceased owner's name, Florida law generally requires an ancillary probate before anyone can sign a deed, and the US estate-tax return for a non-resident, Form 706-NA, may be due even though the treaty usually takes the tax itself to zero. Title companies routinely wait for the IRS transfer certificate before insuring the sale. The good news hiding in the sequence is that heirs take the property with a stepped-up basis, the value at death rather than the price paid decades ago, which often shrinks the taxable gain, the withholding conversation, and the Canadian side all at once. How the treaty credit and the 706-NA work is its own page, US estate tax for Canadians.
And if you are selling while healthy simply to avoid leaving your family a cross-border mess, pause before listing. A lady bird deed or a properly cleared trust can remove the Florida probate problem for a few hundred dollars, which sometimes makes keeping the condo the better plan. That comparison is exactly what a 30-minute conversation is for.
When to Call: Before Listing, Not After Closing
Almost every expensive FIRPTA story we hear follows the same shape. The seller learned the rules at the closing table, after the windows had closed. The 8288-B must be in by the closing date. The ITIN takes seven to eleven weeks. An estate sale needs probate and the 706-NA sequenced before the contract promises a closing date the title cannot meet. All of those clocks run from the contract, or earlier, which is why the right time to call is before the listing goes up.
Here is the honest division of labor. We screen the sale, plan and file the Form 8288-B, write the escrow instructions the closing agent executes, shepherd the W-7, and handle any Florida probate or estate filings, with fees quoted up front. The tax computations inside the certificate and the eventual 1040-NR belong with your CPA or cross-border preparer, and the Canadian return with your Canadian accountant; we coordinate both rather than duplicate them. Selling one property to buy another, or rethinking the winters entirely? The title decision on the next purchase is covered in buying a house in Florida as a Canadian, and the day-count rules that decide how long you can actually stay are in how long can a Canadian stay in the US.
Frequently Asked Questions
How Much Is Withheld When a Canadian Sells Florida Property?
The default is 15% of the gross sale price, not 15% of your profit. On a $600,000 condo that is $90,000 held back at closing. A reduced 10% rate applies when the price is between $300,001 and $1,000,000 and the buyer will use the property as a residence, and no withholding applies at $300,000 or less with buyer-residence use. None of it is automatic, and none of it depends on your actual gain unless you file for a withholding certificate.
Does the US-Canada Treaty Exempt Me From FIRPTA?
No. The treaty expressly lets the United States tax a Canadian resident's gain on US real property, so being Canadian does not remove the withholding or the tax. What helps is the same toolkit any foreign seller has, meaning the buyer-residence tiers, a Form 8288-B withholding certificate that cuts the holdback to your actual expected tax, and a US return that recovers any excess. The treaty's role comes later, when Canada credits the US tax you paid.
How Long Until I See the Withheld Money Again?
It depends entirely on when you act. A Form 8288-B filed on or before closing lets the funds sit in escrow while the IRS decides, generally within about 90 days, and the excess comes back to you weeks after the decision. If the full 15% went to the IRS at closing, you wait for the next filing season, file a Form 1040-NR with your stamped Form 8288-A attached, and refunds through that route commonly take many months more.
Do I Pay Tax Twice, in the US and Canada?
Both countries tax the sale, but the treaty is built to prevent true double tax. The US taxes the gain first because the property is here; Canada taxes the same gain on your Canadian return and allows a foreign tax credit for the US tax. One wrinkle is that the US computes your gain in US dollars and Canada computes it in Canadian dollars, so after years of exchange-rate movement the two gains rarely match, and the credit only offsets where the two taxes overlap. The Canadian return belongs with your Canadian accountant.
Do I Need a US Tax ID to Sell?
You need one to get your money back. Most Canadian sellers have no Social Security number, so the route is an ITIN, applied for on Form W-7 under the exception the IRS provides for real estate sales. The application can travel with the Form 8288-B or with the closing paperwork, and it takes roughly seven to eleven weeks to process. Starting it the week the contract is signed, not at the closing table, is what keeps the rest of the sale on schedule.
What If the Owner Has Died?
Then the order of operations matters more than the FIRPTA math. If the Florida property is still titled in the deceased owner's name, the estate usually needs a Florida ancillary probate before anyone can convey title, a US estate-tax return (Form 706-NA) may be due even when the treaty takes the tax to zero, and title companies generally wait for the IRS transfer certificate. The heirs also take a stepped-up basis, which often shrinks the taxable gain dramatically. Sequence those steps first and the sale goes smoothly; skip them and the closing stalls.
Common Situations
The Oakville couple who planned five weeks ahead. A retired couple sells their $700,000 Fort Myers condo to a buyer who will live there, so the 10% tier applies instead of 15%. Their actual gain is modest, and a Form 8288-B filed five weeks before closing, with W-7s riding along, caps the withholding near the real tax. The funds wait in the title company's escrow, the certificate arrives inside the 90-day window, and the couple has their money weeks after closing instead of after next year's filing season.
The seller who learned the rules at closing. A Calgary owner signs a quick contract on his Clearwater condo and hears the word FIRPTA for the first time at the closing table. The full 15% goes to the IRS, and with no ITIN in hand his stamped Form 8288-A sits in limbo while the W-7 processes. The refund eventually comes through the 1040-NR, but more than a year passes between closing and the check. Nothing went wrong legally; the calendar was simply never planned.
The widow settling two countries at once. A Montreal widow needs to sell the Naples condo titled solely in her late husband's name. We open the Florida ancillary probate, file the 706-NA with the treaty credit so the US estate tax lands at zero, and wait out the transfer certificate before listing. The heirs' stepped-up basis leaves almost no taxable gain, so the 8288-B cuts the withholding to nearly nothing, and her Canadian accountant closes out the final return at home with our numbers in hand.
Sources of Law
- FIRPTA: IRC §897 (gain of a foreign person on US real property treated as effectively connected income); IRC §1445 (buyer withholding: 15% of the gross amount realized by default; 10% for a $300,001 to $1,000,000 buyer-residence sale; no withholding at $300,000 or less with buyer-residence use). irs.gov FIRPTA withholding (retrieved August 9, 2026)
- Mechanics: Instructions for Form 8288 (buyer filing and payment by the 20th day after transfer; deferral while a Form 8288-B is pending until 20 days after the IRS mails its decision); IRS withholding-certificate guidance (action generally within 90 days of a complete application); IRS ITIN guidance for foreign property sellers (Form W-7 exception for FIRPTA dispositions). irs.gov/instructions/i8288 · withholding certificates · ITIN guidance (retrieved August 8, 2026)
- US-Canada treaty: Article XIII(1) (gains from real property situated in the other state may be taxed there); Article XXIV (relief from double taxation; Canadian foreign tax credit for US tax). irs.gov consolidated treaty text (retrieved August 9, 2026)
- Currency: the US gain is computed in US dollars under the functional-currency rules (IRC §985); the Canadian-dollar computation and credit claim are made on the Canadian return by Canadian counsel or your accountant.
- Estate sequencing: Fla. Stat. §734.102 (ancillary administration for a nonresident decedent's Florida property); Fla. Stat. §733.304 (who may serve as personal representative from outside Florida); Form 706-NA and the transfer-certificate process as covered on our Canadian estate-tax page; IRC §1014 (stepped-up basis). leg.state.fl.us §734.102 (retrieved August 9, 2026)
Keep your sale proceeds out of the refund pipeline
Book a free 30-minute consult. We map the withholding, the 8288-B timing, the ITIN, and any estate steps for your sale, and tell you plainly what it will cost.
Updated on August 9, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about US federal tax, treaty, and Florida law, not legal or tax advice, and does not create an attorney-client relationship. Tax computations and return preparation belong with your CPA or cross-border preparer, and Canadian tax with your Canadian accountant or counsel. Your result depends on your specific facts. Do not send confidential information until we have agreed to represent you.