The disposal of real estate often carries (at least) a local tax liability on any recognized capital gains. However, depending on the location of the real estate, a holding structure can be established that will result in preventing the taxation of capital gains following the disposal of the property ownership.

Depending upon the country, the real estate is held directly by the holding company or participated through a local entity. Treaty law in some jurisdictions provides that when real property is disposed, either through a direct or indirect sale of the real estate, capital gain tax is not charged in the local jurisdiction. Further, the subsequent flow of the real estate capital gains to the holding jurisdiction is exempt from both withholding and receipt (i.e., income) taxation.