Foreign Investment in Real Property Tax Act (FIRPTA)

Quick Takeaways

  • FIRPTA, or the Foreign Investment in Real Property Tax Act, was enacted in 1980.

  • Foreign investors are given a Taxpayer Identification Number (TIN) to pay taxes or for withholding purposes on properties they sell in the U.S.

  • The PATH Act of 2015 changed the withholding rate of FIRPTA from 10% to 15% on properties that sold for more than $1 million, among many other provisions.

Source: New FIRPTA Regulations Conform and Update Changes from the PATH Act (PricewaterhouseCoopers, Feb. 23, 2016)

The Foreign Investment in Real Property Tax Act (FIRPTA) was enacted in 1980, initially as a response by Congress to public concerns about increasing foreign ownership of farmland in the United States.  The major purpose of FIRPTA was to establish equity of tax treatment of ownership in U.S. real property between foreign and domestic investors. 

In the 116th Congress, a bill to repeal FIRPTA was introduced in the House of Representatives that attracted the support of many commercial real estate stakeholders in the country, as well as a high number of bipartisan cosponsors on the Ways and Means Committee.  Proponents of this bill, the "Invest in America Act" (H.R. 2210), believed it would increase the amount of foreign capital invested in real estate in the U.S. and also create jobs.

No FIRPTA repeal bills have yet been introduced in the 118th Congress.

See References for more information.