The Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”), principally Internal Revenue Code Sections 897 and 1445, generally subjects a foreign person’s gain from the disposition of a United States real property interest (“USRPI”) to US federal income tax. Section 1445 supports collection of that tax through withholding. FIRPTA is not merely a 15% tax. The commonly cited 15% amount is generally a withholding payment based on the gross amount realized, including cash, other property, and assumed liabilities. The foreign transferor’s actual federal income-tax liability is calculated separately on the applicable return. Withholding may be more or less than the final tax.
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