For non-US individuals and corporations that invest in real estate within the US, the rules that subject their gains to US federal income tax generally are found under Section 897. The Foreign Investment in Real Property Tax Act (FIRPTA) rules have often been attacked as a disincentive for overseas investors to enter the US real estate market. Craig Cohen, a partner in Chapman's Tax Department, authored an article in the May 2018 issue of the Journal of Taxation in order to shed light on some of the more complex aspects of the FIRPTA regime, such as the interplay between FIRPTA and the real estate investment trust (REIT) rules. The article provides a subsection-by-subsection history of FIRPTA reform, omitting those subsections that have never been amended.
This article was originally published in the May 2018 issue of Thomson Reuters Checkpoint’s Journal of Taxation.