The Foreign Investment in Real Property Act (FIRPTA)

By Maria Brandenburg & Janet Moe | Great American Title

Investors – Don’t Hesitate to Work with Foreign Buyers or Sellers.

Working with foreign buyers or sellers can offer many benefits to your real estate investments. However, it's important to understand and comply with relevant regulations.

One key regulation is the Foreign Investment in Real Property Tax Act (FIRPTA), which requires most foreign sellers of U.S. real property to pay capital gains tax on their profits.

Who Must Comply with FIRPTA Withholding?

FIRPTA withholding applies when the seller of U.S. real property is considered a “foreign person.”

This includes:

Nonresident aliens

Foreign corporations that have not elected domestic status

Foreign partnerships, trusts, and estates

In contrast, a “U.S. person” includes:

U.S. citizens

Resident aliens (e.g., green card holders)

Domestic corporations, partnerships, estates, and trusts

Following is a flow chart to help understand the process when dealing with foreign sellers:

For any questions about FIRPTA guidelines, please contact Janet Moe, Branch Manager/Sr. Escrow Officer [email protected] or (602)773-3310.

And for all your data or marketing needs, contact Maria Brandenburg, Account Executive [email protected] or (602)505-6922.