Opportunities for the
Foreign Investor in
U.S. Real Estate—
If Planning Comes First by Michael Hirschfeld and Shaul Grossman
Appeared in January 2001 edition of RIA’s
Journal of Taxation

© Copyright 2003 RIA. All rights reserved.

WG&L Journals
INTERNATIONAL

Opportunities for the Foreign Investor in U.S.
Real Estate—If Planning Comes First
Author: By Michael Hirschfeld and Shaul Grossman
MICHAEL HIRSCHFELD is a partner, and Shaul Grossman is an associate, in the
New York City office of the international law firm of Dechert. Mr. Hirschfeld is a member of the ABA Tax Section’s committees on Real Estate (of which he is the past
Chair), Foreign Activities of US Taxpayers, and US Activities of Foreigners & Tax
Treaties, among others, and has written for The Journal on many occasions.
Copyright © 2000, Michael Hirschfeld and Shaul Grossman.
The complexities of FIRPTA and the even broader withholding scheme that backs it up require that a nonresident acquire a thorough understanding of the rules before making an investment in real estate. The choice of whether to use an entity—and which one—or to hold the investment directly, as well as the type of investment—equity or debt—can have significant and sometimes expensive consequences.

Edited By Sanford H. Goldberg, J.D., and Herbert H. Alpert, J.D.
The global economy is a fact of life at the start of the new millennium. One consequence is that cross-border investments in real estate will expand significantly. Twenty years have elapsed since Congress enacted the Foreign Investment in Real Property Tax Act of
1980 (FIRPTA) to ensure that foreign investors are subject to at least one level of federal income tax when they dispose of U.S. real estate investments. Notwithstanding
FIRPTA’s simple, clear-cut directive, foreign investors still face a host of planning opportunities and potential