TCJA Will Affect Foreign Investments In US Real Estate

Law360 (February 8, 2018, 3:56 PM EST) -- In December 2017, Congress passed the Tax Cuts and Jobs Act, P.L. 115-97, and the president signed it into law on Dec. 22, 2017. The tax act has made significant changes that affect foreign investors in United States real estate ("FIRPTA") utilizing the blocker corporation structure.

FIRPTA generally taxes nonresident alien individuals and foreign corporations on their dispositions of United States real property interests ("USRPIs"). A USRPI includes any interest in United States real property itself and any interest in a United States corporation that predominantly owns real estate ("USRPHC"). The USRPHC is also known as a blocker corporation.

In the typical FIRPTA...

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