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ARTICLE · 02 MAY 2024

FIRPTA - A Practical Approach To The Valuation Exercise

Ankura Consulting Group LLC
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An often unknown yet potentially costly tax can emanate from the Foreign Investment in Real Property Tax Act, known as "FIRPTA." In the following, we discuss a pragmatic approach...

United StatesReal Estate and Construction
Phil Antoon
Phil Antoon

An often unknown yet potentially costly tax can emanate from the Foreign Investment in Real Property Tax Act, known as "FIRPTA." In the following, we discuss a pragmatic approach to the valuation exercise, which is a key part of a FIRPTA analysis.

What Is FIRPTA?

FIRPTA authorizes the Internal Revenue Service to tax non-resident persons or corporations on dispositions of the United States (U.S.) Real Property Interests (USRPIs) when the corporation that owns the USRPIs is deemed to be a U.S. Real Property Holding Corporation (USRPHC). A corporation is defined as a USRPHC when the Fair Market Value (FMV) of its USRPIs on any applicable determination date equals or exceeds 50.0 percent of the sum of the FMVs of its:

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