Which type of property is exempt from Foreign Investment in Real Property Taxes Act withholding?

The correct answer is that personal residences under $300,000 are exempt from Foreign Investment in Real Property Taxes Act (FIRPTA) withholding. FIRPTA requires that buyers of foreign-owned U.S. real property withhold a percentage of the property's sale price to ensure that foreign sellers pay U.S. taxes on any gains from the sale. However, the law provides exceptions for certain types of properties.

Personal residences that are sold for less than $300,000 can qualify for this exemption, provided the buyer intends to use the property as their residence. This provision is designed to encourage home ownership among U.S. residents and to facilitate access to more affordable housing by alleviating the tax burden associated with foreign ownership of smaller, residential properties.

In contrast, commercial properties, foreign investments as a whole, and specific property types like condos and townhouses do not typically benefit from this exemption unless they fall within the stated criteria. Therefore, the exemption for personal residences under $300,000 is particularly important in the context of FIRPTA, highlighting an effort to support domestic homebuyers.