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Foreign Real Estate Investors and FIRPTA

Foreign Real Estate Investors and FIRPTA

Any foreign real estate investor, whether they are buying or selling property in the United States, should be familiar with the Foreign Investment in Real Property Tax act of 1980.

This Internal Revenue Service tax law requires a foreign real estate seller to inform the buyer of their non-residency status so that the buyer can withhold 10% of the property sale cost and remit it to the IRS. Although the foreign real estate seller technically is paying the tax, it is the buyer’s responsibility to make sure the funds are paid to the IRS. If the buyer does not withhold the funds and remit it to the IRS, they could become responsible for paying the tax. This is why it’s so important for both buyers and sellers to be familiar with FIRPTA, even if you are not a foreign real estate investor. You never know when you may find yourself purchasing property from a foreign real estate seller. Read the rest of this entry

Selling U.S. Real Estate as a Foreign Real Estate Investor

Selling U.S. Real Estate as a Foreign Real Estate Investor

When buying or selling property in the United States, foreign real estate investors have a lot to consider. From understanding U.S. real estate jargon and regulations to financing, investing in U.S. property can be confusing at times. One of the biggest sources of confusion has to do with the Foreign Investment in Real Property act of 1980. FIRPTA is a tax law created by the United States Internal Revenue Service. It requires 10% of the sale price of a piece of property to be remitted to the IRS if a foreign real estate seller is involved in the transaction. Read the rest of this entry

Top 7 Questions about FIRPTA

Top 7 Questions about FIRPTA

1.   What is F.I.R.P.T.A.?

F.I.R.P.T.A. is an acronym for Foreign Investment Real Property Tax Act.  In 1980 the United States Congress enacted the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) in response to widespread avoidance of U.S. taxes upon the sale of real property by foreign persons.  A U.S. real property interest includes sales of interests in parcels of real property as well as sales of shares in certain U.S. corporations which are considered U.S. real property holding corporations.  FIRPTA’s objective was to ensure at least one level of taxation for the sale of real estate by foreign persons.  Thirty years later, FIRPTA has evolved as more complex holding structures for acquiring and dispossessing real estate have emerged.  FIRPTA is a withholding, it is not a tax. Read the rest of this entry

What a foreign real estate investor needs to know about investing in U.S. Real Estate

What a foreign real estate investor needs to know about investing in U.S. Real Estate

Foreign real estate investors have plenty to consider when they are purchasing property in the United States. One of the biggest considerations to be aware of, and one that raises the most questions, is the Foreign Investment in Real Property Tax Act of 1980, also known as FIRPTA. Read the rest of this entry

FIRPTA = Not A Dirty Word…

What is FIRPTA? It is an acronym for the Foreign Investment in Real Property Tax Act. It was enacted back in 1980 and requires withholding and remittance of 10% of the amount realized by the foreign seller of a US real property interest. Read the rest of this entry