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Title 26 — Internal Revenue CodeRelease 119-73

§6039C Returns with respect to foreign persons holding direct investments in United States real property interests

Title 26 › Subtitle Subtitle F— - Procedure and Administration › Chapter CHAPTER 61— - INFORMATION AND RETURNS › Subchapter Subchapter A— - Returns and Records › Part PART III— - INFORMATION RETURNS › Subpart Subpart A— - Information Concerning Persons Subject to Special Provisions › § 6039C

Last updated Apr 6, 2026|Official source

Summary

Foreign persons who own direct investments in U.S. real estate during a calendar year must file a return. The return must say who they are and where they live, describe each U.S. real property interest they held that year, and include any other details the Treasury/IRS requires. The Treasury/IRS will set the rules for when and how to file. A "foreign person" is anyone who is not a U.S. person. A person is treated as holding these investments if they did not do business in the U.S. that year and the fair market value of their directly held U.S. real property reached $50,000 or more at any time. Property held by a partnership, trust, or estate is divided among owners. Property held by a spouse or a minor child is treated as owned by the individual. Nonresident aliens or foreign corporations taxed under section 897(a) (and those who must withhold under section 1445) must file and pay taxes to the United States for U.S. property and to the Virgin Islands for property there, including certain ownership interests in domestic corporations (not just creditor claims) described in section 897(c)(1)(A)(ii).

Full Legal Text

Title 26, §6039C

Internal Revenue Code — Source: USLM XML via OLRC

(a)To the extent provided in regulations, any foreign person holding direct investments in United States real property interests for the calendar year shall make a return setting forth—
(1)the name and address of such person,
(2)a description of all United States real property interests held by such person at any time during the calendar year, and
(3)such other information as the Secretary may by regulations prescribe.
(b)For purposes of this section, a foreign person shall be treated as holding direct investments in United States real property interests during any calendar year if—
(1)such person did not engage in a trade or business in the United States at any time during such calendar year, and
(2)the fair market value of the United States real property interests held directly by such person at any time during such year equals or exceeds $50,000.
(c)For purposes of this section—
(1)The term “United States real property interest” has the meaning given to such term by section 897(c).
(2)The term “foreign person” means any person who is not a United States person.
(3)For purposes of subsection (b)(2)—
(A)United States real property interests held by a partnership, trust, or estate shall be treated as owned proportionately by its partners or beneficiaries.
(B)United States real property interests held by the spouse or any minor child of an individual shall be treated as owned by such individual.
(4)All returns required to be made under this section shall be made at such time and in such manner as the Secretary shall by regulations prescribe.
(d)A nonresident alien individual or foreign corporation subject to tax under section 897(a) (and any person required to withhold tax under section 1445) shall pay any tax and file any return required by this title—
(1)to the United States, in the case of any interest in real property located in the United States and an interest (other than an interest solely as a creditor) in a domestic corporation (with respect to the United States) described in section 897(c)(1)(A)(ii), and
(2)to the Virgin Islands, in the case of any interest in real property located in the Virgin Islands and an interest (other than an interest solely as a creditor) in a domestic corporation (with respect to the Virgin Islands) described in section 897(c)(1)(A)(ii).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1986—Subsec. (d). Pub. L. 99–514 inserted “(and any person required to withhold tax under section 1445)” after “section 897(a)”. 1984—Pub. L. 98–369 amended section generally, inserting in section catchline “foreign persons holding direct investments in” and substituting in text provisions concerning returns with respect to foreign persons holding direct investments in United States real property for provisions concerning returns with respect to United States real property interests. 1981—Subsec. (b)(4)(C). Pub. L. 97–34, § 831(e), substituted “For purposes of determining whether an entity to which this subsection applies has a substantial investor in United States real property, the assets of any person shall include the person’s pro rata share of the United States real property interest held by any corporation (whether domestic or foreign) if the person’s pro rata share of the United States real property interests exceeded $50,000” for “The assets of any entity to which this subsection applies shall include its pro rata share of the United States real property interests held by any corporation in which the entity is a substantial investor in United States real property”. Subsec. (f). Pub. L. 97–34, § 831(a)(3), added subsec. (f).

Statutory Notes and Related Subsidiaries

Effective Date

of 1986 AmendmentAmendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.

Effective Date

of 1984 Amendment Pub. L. 98–369, div. A, title I, § 129(c)(2), July 18, 1984, 98 Stat. 660, provided that: “The

Amendments

made by subsection (b) [amending this section] shall apply to calendar year 1980 and subsequent calendar years.”

Effective Date

of 1981 AmendmentAmendment by Pub. L. 97–34 applicable to dispositions after June 18, 1980, in taxable years ending after such date, see section 831(i) of Pub. L. 97–34, set out as a note under section 897 of this title.

Effective Date

Section applicable to 1980 and subsequent calendar years, with 1980 being treated as beginning on June 19, 1980, and ending on Dec. 31, 1980, see section 1125(b) of Pub. L. 96–499, set out as a note under section 897 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 6039C

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73