Legal Definitions - look-through principle

The look-through principle is a tax doctrine that is used to allocate transfer-gains taxes on real estate. This principle involves looking beyond the legal title holder of a property to identify the beneficial owners of the property.

Let's say that a company owns a piece of real estate, but the company is actually owned by several individuals. Under the look-through principle, the transfer-gains taxes on the property would be allocated to the individual owners, rather than the company itself.

Another example would be if a trust owns a property, but the beneficiaries of the trust are the true owners. The look-through principle would allocate the transfer-gains taxes to the beneficiaries, rather than the trust.

These examples illustrate how the look-through principle is used to ensure that the true owners of a property are responsible for paying transfer-gains taxes, rather than the legal entity that holds the title to the property.