FIRPTA - Wagner, Kaplan, Duys, & Wood

United States Department of Commerce Statistical Forms for Foreign Investors in United States Real Estate (FIRPTA)

If a foreign investor acquires at least a 10% voting control of a United States commercial real estate property, in addition to income tax filings, they will be required to file information forms with the United States Department of Commerce, Bureau of Economic Analysis (“BEA”). These reports filed by the foreign investors are not made…

Key Answers to the Top Ten Questions on the New Limits Governing Interest Deductions for FIRPTA Blocker Corporations

Interest Deduction Limit under TCJA Under the Tax Cuts and Jobs Act of 2017 (TCJA), the deduction for interest paid or accrued to a related or unrelated party is limited to the sum of the taxpayer’s business interest income and 30% of adjusted taxable income for the year. For taxable years before 2022, the limitation…

Form 8288-B May Reduce a Foreign Investor’s FIRPTA Withholding Tax Liability on Sale of a U.S. Real Property Partnership Interest

Foreign investors are often motivated to acquire U.S. real property when considering the opportunity for appreciation in value and a profitable return on investment. There are different investment structuring alternatives that may attract foreign investors to the U.S. real estate market. A common typical structure that has certain advantages is the U.S. blocker corporation. The…

Foreign Investors in U.S. Real Property May Reduce FIRPTA Withholding Tax Liability by Filing Form 8288-B Exemption Certificate Application

Foreign investors often invest in commercial and residential real property located in the United States. The economic advantages of U.S. real property investment include the opportunity for appreciation in value and a profitable return on the investment. The Internal Revenue Service has noted a “phenomenal rise” in foreign investment in U.S. real property due to…

Understanding FIRPTA Withholding and Compliance

One of the major drawbacks for foreign investors and foreign companies that invest in U.S. real estate is the withholding requirement associated with transactions covered by the Foreign Investment in Real Property Tax Act (FIRPTA). These investors do not have the luxury of waiting until Tax Day and filing a U.S. return with a check…

Transactions Beyond the Reach of FIRPTA Tax

We write a great deal about the transactions that are subject to taxation under the Foreign Investment in Real Property Tax Act (FIRPTA). But what about the transactions that are not subject to FIRPTA tax? Indeed, there are many. There are exemptions in the U.S. tax code that can allow a foreign investor or foreign…

Understanding FIRPTA Tax, and Tax Treaties

Did you know that foreign corporations can elect to be treated as a domestic corporation by the U.S. Internal Revenue Service (IRS) for tax purposes? It has advantages and disadvantages. Savvy investors will weigh the pros and cons. Foreign corporations are subject to taxation and withholding under the Foreign Investment in Real Property Tax Act…

How Does FIRPTA Treat Distributions and Other Transactions by Property Investment Companies?

FIRPTA taxes apply when foreign investors or property investment companies sell U.S. real estate assets. But what about distributions, liquidations and other transactions? A complicated system of FIRPTA rules apply to these situations and it is important to understand how these rules apply before structuring transactions. We’ll discuss some of the more common cases. Generally…

When Selling Investment Properties, You Should Know How FIRPTA Applies

Let’s say a foreign corporation owns a building in the United States that houses a restaurant. Suppose the corporation owns everything, including the land, the building and the furnishings. If the company sells the entire asset, would it pay taxes on the furniture, all those tables, chairs and barstools? Questions like this—we’ll answer it later—make…

United States Department of Commerce Statistical Forms for Foreign Investors in United States Real Estate (FIRPTA)

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