International Tax

U.S. Taxation of Foreign Investment in U.S. Real Estate (Portfolio 912)

  • This Portfolio discusses the federal tax rules bearing upon foreign investment in U.S. real estate.


Bloomberg Tax Portfolio, U.S. Taxation of Foreign Investment in U.S. Real Estate, is a detailed analysis containing a discussion of the various federal tax rules one will encounter when addressing this topic. The principal subject areas of this Portfolio include: (1) the U.S. income tax regime applicable to foreign persons during the ownership phase of U.S. real estate (including summaries of certain key domestic tax rules affecting real estate); (2) the taxation of U.S. real property interest dispositions under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA); (3) the FIRPTA withholding tax provisions; and (4) the basic estate and gift tax rules applicable to foreign persons.

The Worksheets contain numerous sample documents which practitioners will find invaluable when assisting clients with tax issues in this area. The Worksheets are divided into the following categories: (1) materials relating to establishing that a corporation’s stock is not a U.S. real property interest; (2) materials relating to certification of non–foreign status; (3) materials relating to corporate distributions, nonrecognition exchanges, and reorganizations; (4) materials relating to the exceptions to withholding for nonrecognition transfers and transfers by foreign governments; (5) materials relating to the §897(i) election; (6) materials relating to withholding certificates; (7) security instruments and powers of attorney; (8) tax payment agreements; (9) required notifications; and (10) sample elections.

Table of Contents

I. Introduction
II. Taxation During the Ownership Phase
III. U.S. Income Taxation of Foreign Persons’ Disposition of U.S. Real Property Interests
IV. The FIRPTA Withholding
V. Obligations of Agents, Penalties, and Foreign Investment Disclosure Requirements
VI. U.S. Gift and Estate Tax Considerations

Michael Caballero
Covington&Burling LLP
Suzanne Feese
Michael Plowgian