On the surface, the Foreign Investment in Real Property Tax Act (FIRPTA) seems straightforward enough: Foreign people must pay a 10- or 15-percent tax when they sell a piece of U.S. real estate. As always, though, the devil is in the details. And there are a lot of details, exceptions, and complicating factors. Knowing that real estate transactions with some level of foreign involvement are quite common in Texas, sooner or later most real estate professionals in the state are likely to work on a deal subject to FIRPTA.
Arturo Machado, CPA, and leader of the international practice group at Sol Schwartz & Associates. works on approximately 25-30 FIRPTA transactions annually and dives into the details of how and to whom FIRPTA applies in his article published in the Texas Association of Realtors’ magazine, Texas Realtor.