Field Guide to Foreign Investment Real Property Tax Act (FIRPTA)

FIRPTA was enacted in 1980 to address perceived abuses by foreign investors, who, unlike U.S. citizens, were not required to pay capital gains taxes, to create equity of tax treatment between foreign and domestic real estate owners. Under FIRPTA, foreign real estate owners are required to withhold a portion of the amount realized, to be paid to the IRS. The recently passed PATH Act of 2015 impacted withholding rates. This field guide provides a history of FIRPTA and the changes due to the PATH Act of 2015.