New FIRPTA Regulations update changes from the PATH Act

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February 2016


The Treasury and IRS issued temporary and final regulations on February 17, 2016, that generally conform and update the existing regulations to changes made to the Foreign Investment in Real Property Tax Act (FIRPTA) by H.R. 2029, (herein ‘the PATH Act’).  The PATH Act was signed into law on December 18, 2015.

The PATH Act: (i) increased the general rate of withholding on dispositions of US Real Property Interests (USRPIs) from 10% to 15%, (ii) exempted certain foreign retirement funds from the application of FIRPTA, (iii) increased the amount of stock a foreign person may own in a publicly traded real estate investment trust (REIT) from 5% to 10%, (iv) added a new exception for qualified shareholders in REITs, and (v) modified the ’cleansing rule’ and the definition of a ‘domestically controlled’ qualified investment entity.

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