FIRPTA

Definition

Foreign Investment in Real Property Tax Act—IRS rules requiring withholding from foreign sellers of US real estate. Because Uncle Sam doesn't trust foreigners to voluntarily pay capital gains taxes after they've left the country with the money.

Example Usage

As a Canadian seller, he had to navigate FIRPTA withholding requirements and file for a reduced rate certificate.

Origin

Federal legislation enacted in 1980 to ensure tax collection from foreign sellers

Fun Fact

FIRPTA typically requires withholding 15% of the sales price, which can be a nasty surprise for foreign sellers expecting to walk away with full proceeds.

Source: IRS tax regulation terminology

Related Terms

Beginner

As-Is

The seller's polite way of saying "we know it's broken and we don't care." Buying a property as-is is basically adopting a feral house and hoping love alone can fix the plumbing.

🏠 Real Estate

Advanced

quiet title action

A lawsuit to establish clear ownership when a property's title is messier than a reality TV custody battle. It's how you legally tell all the random people with claims on your property to take a hike.

🏠 Real Estate

Intermediate

construction lien

A legal claim filed by contractors, subcontractors, or suppliers against a property when they haven't been paid for work or materials. The construction industry's way of ensuring they don't become involuntary donors.

🏠 Real Estate

Intermediate

percentage rent

Additional rent paid by retail tenants based on a percentage of their gross sales above a threshold, common in shopping centers. It's the landlord's way of ensuring they profit from your business success while you bear all the risk.

🏠 Real Estate

Intermediate

net operating income

A property's annual revenue minus operating expenses but before debt service and taxes, the key metric for commercial real estate valuation. Abbreviated NOI, it's the number that makes or breaks whether your investment property is actually profitable.

🏠 Real Estate

Intermediate

Multiple Offers

The seller's way of telling you that your offer has competition, which may or may not be real but will definitely make you panic and overbid. It's the real estate equivalent of "other people are looking at this item right now."

🏠 Real Estate

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