Our Services

Foreign Investment in U.S. Real Estate

Foreign investments in U.S. real estate, particularly in the major Florida cities and various beachfront communities have dramatically increased over the past several years and are expected to grow. While foreign investors continue to park their money in the U.S. Real Estate, very few realize the dire tax and legal consequences of investing into U.S. real estate without proper advance planning. Frequently, problems arise after the property is sold, or after the property has passed through the estate, and the owner/beneficiary is left with a substantial tax bill.

The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests. A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers' agents, and settlement officers are required to withhold 15 percent of the amount realized on the disposition (special rules for foreign corporations). In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax. For cases in which a U.S. business entity such as a corporation or partnership disposes of a U.S. real property interest, the business entity itself is the withholding agent.

Our experienced team of professionals assist various title companies, foreign individuals, and foreign companies with their FIRPTA compliance. We prepare the FIRTPA withholding statements, offer guidance, and assist with any questions you may have. In addition, we also assist our foreign clients with annual U.S. income tax returns to report the sale of their U.S. real estate or report the rental activity if rented before the U.S. real estate is sold.

FIRPTA and Related Services

  • FIRPTA tax planning
  • FIRPTA withholding tax returns
  • FIRPTA withholding certificates applications
  • Form 1040NR, U.S. non-resident alien income tax returns
  • Form 1120-F, U.S. income tax return of a foreign corporation
  • Form 3520, annual return to report transactions with foreign trusts and receipt of certain foreign gifts
  • Buyer’s certifications
  • Individual taxpayer identification number applications and passport certifications

For more information — or to schedule an appointment — please contact Antoine Matar at amatar@metzleradvisory.com.