Which type of property purchases are exempt from FIRPTA?

The correct answer focuses on the criteria established by FIRPTA (Foreign Investment in Real Property Tax Act). One of the key exemptions provided under this act pertains to properties that are intended for use as a primary residence by the buyer. Specifically, if the property is purchased for less than a certain threshold— in this case, $300,000—there is an exemption from the withholding tax requirements that FIRPTA imposes on foreign sellers.

This exemption is pivotal because it aims to encourage home ownership among buyers and facilitates transactions without the complications that FIRPTA typically introduces when dealing with foreign investments in U.S. real estate. The decision recognizes the difference between investment properties and those being purchased for personal use, thereby easing the process for a significant segment of buyers in the real estate market.

In contrast, other options such as commercial properties over $500,000 or rental properties generating income do not qualify for such exemptions under FIRPTA since they do not meet the necessary criteria laid out for primary residence purchases. Furthermore, properties owned by foreign governments generally have different considerations and are typically exempt from FIRPTA, but they do not apply in the context of primary residences, which is specifically what option B addresses. Thus, option B's focus on personal residential