Foreign Investment in Real Property Tax Act of 1980
Prior to the enactment of the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), a foreign investor could generally sell United States real property without paying federal income tax on capital gains realized from the sale. This was changed by FIRPTA, which imposes a tax on gain realized by foreign investors on dispositions of their United States real property interests. A United States real property interest is generally any interest in (1) real property in the U.S., or (2) a domestic corporation, unless the corporation is not a United States real property holding corporation. A United States real property holding company is generally a corporation whose fair market value of United States real property interests equals or exceeds 50 percent of the fair market value of its interests in real property both within and outside of the U.S., plus any other of its assets that are used or held for use in trade or business.