Withholding of Tax on Dispositions of U.S. Real Property Interests

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International Tax Gap Series July 2008

It’s no secret that foreign investors are being courted by U.S. real estate agents and other investment conduits with eye-popping deals to buy real property in the U.S. The combination of a weak U.S. dollar and low interest rates has led to a phenomenal rise in the purchase of a U.S. real property interest by foreign investors. Eventually, these real property interests will be sold; therefore, foreign investors (transferors) and buyers (transferees) need to know their U.S. tax obligations when a disposition occurs.This article, the sixth in a series relating to the international tax gap, explains the rules for proper withholding of tax on the dispositions of U.S. Real Property interest. It also clarifies who is obligated to conduct the required withholding of tax upon the foreign investor’s disposition of real property interests.

Source: Withholding of Tax on Dispositions of U.S. Real Property Interests

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