Foreign Investment in Real Property Tax Act

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Foreign Investment in Real Property Tax Act (FIRPTA)

A federal law designed to assist in the collection of income taxes when foreign owners and investors sell real property or shares in entities that own real property.

Purchasers are required to withhold 10 percent of the sales price unless either of the following occurs:

1. The IRS is asked to calculate the exact taxes that would be due, in which case that amount will be withheld.

2. The purchaser will use the property as a residence and the selling price is less than $300,000.

Purchasers must report the withholding on IRS Form 8288 or 8288-A and must report and pay over the money within 20 days after purchase. If purchasers do not withhold, they may be liable for the taxes themselves.Almost all real estate closings today require the seller's signature on what's called the FIRPTA affidavit, stating that the seller is not a foreign person. (For more information, see Publication 515,“Withholding of Tax on Nonresident Aliens and Foreign Entities,”available at the IRS Web site,

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Congress passed FIRPTA to achieve parity in the tax treatment of foreign and domestic investors in U.S.
To track the foreign party ownership of a disposition, FIRPTA originally enacted a reporting system buttressed by proposed and temporary regulations, none of which became effective.
In general, FIRPTA overrides nonrecognition provisions unless, among other requirements, the USRPI is exchanged for a USRPI or the transaction is within one of the enumerated foreign-to-foreign nonrecognition transactions set forth in Temp.
For FIRPTA purposes, "disposition" is defined broadly as "any transfer that would constitute a disposition by the transferor for any purpose of the ...
Before the issuance of the ruling, there was no guidance on how the NPC rules work in conjunction with the FIRPTA provisions.
REIT's stock without triggering FIRPTA upon sale of the stock or upon receiving proceeds from a REIT's sale of assets.
person, however, FIRPTA imposes a withholding requirement.
"The recent legislation bringing welcome relief from certain FIRPTA taxes should provide additional incentives for foreign investment into the US.
* FIRPTA notice requirements for property acquired in foreclosure sale; p.
real estate is the Foreign Investment in Real Property Tax Act (FIRPTA), or more specifically, Internal Revenue Code (the "Code") [section] 897.
His valuation experience includes ASC 805 valuations, REIT conversions,corporate planning and FIRPTA issues.