Ace the Arizona Real Estate Exam 2026 – Unlock Your Property Dreams!

The intent of the Foreign Investment Real Property Act (FIRPTA) is primarily to require tax withholding on the sale of U.S. real property interests when the seller is a non-resident alien or a foreign corporation. This law was enacted to ensure that the U.S. government can collect taxes owed on the gains from the sale of real estate by foreign investors. By mandating withholding from the transaction proceeds, FIRPTA helps to secure tax revenue and prevent tax avoidance by non-residents.

Other choices do not align with FIRPTA's specific purpose. For instance, while reporting sales price to the IRS is important in general tax regulation, FIRPTA's core focus is on non-resident sellers. Similarly, the reporting of personal property sales and describing the loan status of foreign nationals does not fall under the act’s framework, as these aspects are not directly related to the taxation of real estate transactions involving foreign investors. Thus, the requirement for tax withholding from non-resident sellers is the definitive aspect that encapsulates the intent and function of FIRPTA.