The Pros and Cons of Using a “Multi-Tiered Blocker Structure” to Avoid FIRPTA
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”). FIRPTA is designed to ensure that a foreign investor is taxed on the disposition of a U.S. real property interest, which includes an interest in U.S. reality and an interest in a U.S. corporation that was a U.S. real property holding corporation (“RPHC”) at any time during the five-year period before the disposition. A corporation is deemed an RPHC if the value of its U.S. real property interests equals or exceeds the value…