{"id":4543,"date":"2026-02-01T17:04:35","date_gmt":"2026-02-01T17:04:35","guid":{"rendered":"https:\/\/arora.law\/newsite\/?page_id=4543"},"modified":"2026-05-12T20:26:05","modified_gmt":"2026-05-12T20:26:05","slug":"the-foreign-investment-in-real-property-tax-act-firpta-withholding","status":"publish","type":"page","link":"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/the-foreign-investment-in-real-property-tax-act-firpta-withholding\/","title":{"rendered":"The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-page\" data-elementor-id=\"4543\" class=\"elementor elementor-4543\" data-elementor-post-type=\"page\">\n\t\t\t\t<div class=\"elementor-element elementor-element-d7d68cd e-flex e-con-boxed e-con e-parent\" data-id=\"d7d68cd\" data-element_type=\"container\" 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menu-item-object-page menu-item-4530\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/us-branch-profit-tax\/\">U.S. Branch Profit Tax<\/a><\/li>\n<li id=\"menu-item-4542\" class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4542\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/us-business-income-tax\/\">U.S. Business Income Tax<\/a><\/li>\n<li id=\"menu-item-4551\" class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4551\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/the-foreign-investment-in-real-property-tax-act-firpta-withholding\/\">The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding<\/a><\/li>\n<li id=\"menu-item-4560\" 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Open links with Enter or Space, close with Escape, and navigate with Arrow Keys\">\n\t\t\t\t\t\t<details id=\"e-n-accordion-item-2670\" class=\"e-n-accordion-item\" >\n\t\t\t\t<summary class=\"e-n-accordion-item-title\" data-accordion-index=\"1\" tabindex=\"0\" aria-expanded=\"false\" aria-controls=\"e-n-accordion-item-2670\" >\n\t\t\t\t\t<span class='e-n-accordion-item-title-header'><div class=\"e-n-accordion-item-title-text\"> Quick Links <\/div><\/span>\n\t\t\t\t\t\t\t<span class='e-n-accordion-item-title-icon'>\n\t\t\t<span class='e-opened' ><svg aria-hidden=\"true\" class=\"e-font-icon-svg e-far-window-close\" viewBox=\"0 0 512 512\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M464 32H48C21.5 32 0 53.5 0 80v352c0 26.5 21.5 48 48 48h416c26.5 0 48-21.5 48-48V80c0-26.5-21.5-48-48-48zm0 394c0 3.3-2.7 6-6 6H54c-3.3 0-6-2.7-6-6V86c0-3.3 2.7-6 6-6h404c3.3 0 6 2.7 6 6v340zM356.5 194.6L295.1 256l61.4 61.4c4.6 4.6 4.6 12.1 0 16.8l-22.3 22.3c-4.6 4.6-12.1 4.6-16.8 0L256 295.1l-61.4 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class=\"uc-side-menu-items\">\n    <div class=\"uc-header\">\n\n      \n    <\/div>\n\n    <ul id=\"menu-for-business-us-federal-tax-1\" class=\"uc-list-menu\"><li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4474\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/us-custom-duties\/\">U.S. Custom Duties<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4493\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/us-payroll\/\">U.S. Payroll<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4506\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/eci-effectively-connected-income\/\">ECI (Effectively Connected Income)<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4521\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/fdap-fixed-determinable-annual-periodical-considerations\/\">FDAP (Fixed, Determinable, Annual, Periodical) considerations<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4530\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/us-branch-profit-tax\/\">U.S. Branch Profit Tax<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4542\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/us-business-income-tax\/\">U.S. Business Income Tax<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4551\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/the-foreign-investment-in-real-property-tax-act-firpta-withholding\/\">The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-4560\"><a target=\"_blank\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/digital-asset-taxation\/\">Digital Asset Taxation<\/a><\/li>\n<\/ul>\n    \n  <\/div>\n\n<\/div>\n<!-- end Accordion Menu -->\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/details>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-3b77e61 e-con-full e-flex e-con e-child\" data-id=\"3b77e61\" data-element_type=\"container\">\n\t\t<div class=\"elementor-element elementor-element-f28341c e-con-full content-section-left e-flex e-con e-child\" data-id=\"f28341c\" data-element_type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-d33b76c elementor-widget elementor-widget-text-editor\" data-id=\"d33b76c\" data-element_type=\"widget\" id=\"branch\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3>The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding<\/h3><p>The FIRPTA withholding applies to foreign persons and corporations selling U.S. real property interests.<\/p><p>If you are a foreign property owner planning to sell your real estate in the U.S., you may be subject to U.S. taxes on the capital gains from the sale.<\/p><p>These rules are governed by the <a href=\"https:\/\/www.irs.gov\/individuals\/international-taxpayers\/firpta-withholding#:~:text=The%20disposition%20of%20a%20U.S.,of%20U.S.%20real%20property%20interests.\" target=\"_blank\" rel=\"noopener\">Foreign Investment in Real Property Tax Act (FIRPTA),<\/a> which mandates the buyer to withhold taxes when foreign individuals or corporations sell real estate in the U.S. It ensures that foreign investors are taxed on their sale of U.S. real property interests.<\/p><p>Under the Foreign Investment in Real Property Tax Act (FIRPTA), foreign corporations may be subject to U.S. tax on the disposition of <a href=\"https:\/\/www.irs.gov\/individuals\/international-taxpayers\/firpta-withholding#:~:text=The%20disposition%20of%20a%20U.S.,of%20U.S.%20real%20property%20interests.\" target=\"_blank\" rel=\"noopener\">U.S. real property interests<\/a>. This includes direct sales of real estate and indirect sales, such as the sale of shares in a U.S. corporation whose primary assets are real property.<\/p><p>When a foreign corporation sells U.S. real property, FIRPTA requires the buyer to withhold a portion of the sales price, typically <a href=\"http:\/\/15% to : https:\/\/www.irs.gov\/individuals\/international-taxpayers\/firpta-withholding#:~:text=are%20required%20to-,withhold%2015%25,-(10%25%20for%20dispositions\" target=\"_blank\" rel=\"noopener\" data-wplink-url-error=\"true\">15%<\/a> (as of 2025), and remit it to the Internal Revenue Service (IRS). This withholding ensures that the foreign corporation pays any applicable taxes on the gain from the sale. This aligns with U.S. tax policy objectives to ensure that foreign investors meet their tax obligations on U.S. real property transactions.<\/p><p>For a detailed discussion about FIRPTA, <a href=\"https:\/\/arora.law\/newsite\/how-to-obtain-your-firpta-refund-sooner\/\">please refer to the following article<\/a>.<\/p><p><strong>Example<\/strong>: A foreign German company, ABC Corp, sells a commercial office building in Chicago for $10 million. It had initially purchased the property for $7 million. The property was sold to XYZ Real Estate LLC. Under FIRPTA, the buyer (XYZ Real Estate LLC) should withhold 15% of the gross sales price, which is $1.5 million. Generally, this amount will be remitted directly to the IRS at closing.<\/p><p>This withholding ensures that ABC Corp cannot avoid paying U.S. taxes on its $3 million capital gain from the property sale. ABC Corp will later file a U.S. tax return to calculate the actual tax owed on the gain and either pay additional taxes if the withholding was insufficient or claim a refund if the withholding exceeded the actual tax liability.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-d904e0b e-flex e-con-boxed e-con e-parent\" data-id=\"d904e0b\" data-element_type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-e3b442a elementor-widget__width-initial elementor-widget elementor-widget-heading\" data-id=\"e3b442a\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Do you need guidance on U.S. and International Tax Matters?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding Quick Links skip render: ucaddon_ue_accordion_menu Quick Links skip render: ucaddon_ue_accordion_menu skip render: ucaddon_ue_accordion_menu The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding The FIRPTA withholding applies to foreign persons and corporations selling U.S. real property interests. If you are a foreign property owner planning [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2880,"parent":4436,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"elementor_header_footer","meta":{"footnotes":""},"class_list":["post-4543","page","type-page","status-publish","has-post-thumbnail","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding - Arora Law P.C<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/arora.law\/newsite\/inbound-tax-planning\/post-entry-strategies\/u-s-federal-tax-framework\/for-businesses\/the-foreign-investment-in-real-property-tax-act-firpta-withholding\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding - Arora Law P.C\" \/>\n<meta property=\"og:description\" content=\"The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding Quick Links skip render: ucaddon_ue_accordion_menu Quick Links skip render: ucaddon_ue_accordion_menu skip render: ucaddon_ue_accordion_menu The Foreign Investment in Real Property Tax Act (FIRPTA) Withholding The FIRPTA withholding applies to foreign persons and corporations selling U.S. real property interests. 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