Screen a disposition of a U.S. real property interest for FIRPTA withholding

Key facts

Human involvement

Yellow · Close supervision

How AI is used

State whether the transferor is a foreign person, whether the asset is a U.S. real property interest, and the amount realized. Apply 15 percent only as the general rate, and flag a residence the transferee will use as a home if the amount realized does not exceed $1,000,000.

What the lawyer must review

The IRS FIRPTA page says a disposition of a U.S. real property interest by a foreign person is subject to withholding. The buyer is generally the withholding agent and must withhold 15 percent of the amount realized, with 10 percent stated for dispositions before February 17, 2016. A U.S. real property interest includes an interest, other than as a creditor, in real property located in the United States or the U.S. Virgin Islands, certain personal property associated with the use of that real property, and an interest in a domestic corporation unless it is established that the corporation was not a U.S. real property holding corporation during the shorter of the holding period or the five years ending on the disposition. 26 U.S.C. § 1445 requires the transferee to withhold 15 percent of the amount realized, and it substitutes 10 percent where the property is acquired by the transferee for use as a residence, the amount realized does not exceed $1,000,000, and subsection (b)(5) does not apply.

Written for / version

United States versionUS