USAQATARCAPITAL
Interactive Tool

FIRPTA Estimator

Demonstrates the punitive nature of the Foreign Investment in Real Property Tax Act by calculating the 15% gross withholding on a hypothetical sale, emphasizing the need for proper structuring.

Actual Capital Gain
FIRPTA Withholding (15% of GROSS)
Cash Tied Up at Closing
Warning: The required FIRPTA withholding exceeds your actual capital gain. This is common in highly levered or low-margin deals and illustrates why direct foreign ownership without a blocker structure is highly inefficient.

Structural Context

  • The 15% Rule: Under FIRPTA, the buyer is required to withhold 15% of the amount realized (usually the gross sales price, not the profit) and remit it to the IRS within 20 days of closing.
  • Refunds take time: While this is technically a withholding tax (you file a US tax return later to calculate actual tax owed and claim a refund if 15% is an overpayment), it ties up significant capital for 12-18 months, destroying IRR.
  • The Blocker Solution: By utilizing a US C-Corporation to hold the asset, the sale is no longer subject to FIRPTA withholding (the C-Corp simply pays standard US corporate tax). See our Tax Structuring Guide.