FIRPTA and the Benefits of a Section 897(i) Election

FIRPTA and the Benefits of a Section 897(i) Election

Tax Law
By Anthony Diosdi Foreign investors actively invest in U.S. real estate by speculating on land and developing homes, condominiums, shopping centers, and commercial buildings. Many foreign investors own recreational property in popular U.S. beach and ski destinations. Any foreign investor in U.S. real estate should consider the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) or the effects of Section 897 of the Internal Revenue Code. Section 897 was designed to counteract the use of the various techniques that had been developed to avoid income tax on the disposition of U.S. real property. Section 897 provides that gain or loss realized by nonresident aliens or foreign corporations on the disposition of U.S. real property. Section 897 provides that gain or loss realized by nonresident aliens or foreign corporations…
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