At the November meeting of the Lancaster Commercial and Industrial Real Estate Council, Rich Weeber of Regal Abstract warned of the problems that the “Foreign Investment in Real Property Tax Act” or FIRPTA could cause in real estate transactions. In a room full of real estate professionals, we discovered that some people had no idea what FIRPTA was, and the rest of us only worked through it when we had to. It didn’t seem like anyone felt 100% comfortable with what to do if it came up.
This post will explain what FIRPTA is, what to do if it applies in a real estate transaction, and the dangers of not paying attention to it.
What is FIRPTA?
Congress enacted FIRPTA in 1980 to manage foreign investment in U. S. real estate. (I remembered it as a reaction to Japanese investors buying American property, such as Pebble Beach Golf Course, Rockefeller Center and lots of other Manhattan properties in the 1980’s, but it turns out the law was passed before those things happened.) The goal of FIRPTA is to capture income when a “Foreign Person” sells “U. S. Real Estate.”
Continue Reading What is FIRPTA, and What Do I Need to Know About It?