FIRPTA issues involving LLC ownership structures can sometimes create confusion during real estate transactions. Many buyers and closing agents assume that purchasing property from a U.S. LLC automatically avoids FIRPTA withholding requirements. That assumption is not always correct. In some cases, the underlying ownership of the LLC may still involve foreign persons or foreign-owned entities that can trigger FIRPTA considerations. The analysis may depend on factors such as:

Many foreign sellers are surprised to learn that FIRPTA withholding may potentially be reduced before closing through a properly prepared withholding certificate application. Under FIRPTA, buyers are generally required to withhold a percentage of the gross sales price when purchasing U.S. real estate from a foreign seller. However, the withholding amount is not always the seller’s actual U.S. tax liability. In some situations, the seller’s final tax obligation may ultimately