NMHC and NAA joined real estate partners to send a letter urging members of the House to support legislation repealing the Foreign Investment in Real Property Tax Act (FIRPTA). Representatives John Larson (D-CT) and Kenny Marchant (R-TX) are expected to introduce the legislation next month.
FIRPTA imposes significant costs on foreign investors in U.S. real estate, thereby serving as a significant barrier to such investment. For example, foreign investors do not have to pay capital gains taxes when they sell stocks and bonds in non-real estate U.S. companies. Foreign investors can avoid U.S. taxes and reduce their worldwide tax burden simply by investing in U.S. equities instead or in real estate outside the U.S. The discriminatory and punitive tax regime created by FIRPTA precludes U.S. real estate companies from tapping into an important source of capital for developing, upgrading and refinancing properties.
Repealing FIRPTA could unlock billions in foreign capital that could help to refinance real estate loans and drive new investment. The Rosen Consulting Group in a July 2017 report, Unlocking Foreign Investment in U.S. Commercial Real Estate, concluded that FIRPTA repeal would generate between $65 billion and $125 billion in international investment in U.S. commercial real estate. This capital would translate into between $26 billion and $49 billion of economic activity and support an additional 147,000 to 284,000 jobs.
As FIRPTA repeal could lead to billions of dollars in U.S. commercial real estate investment, NMHC and NAA submitted a statement for the record for a March 6 House Ways and Means Committee hearing calling such a proposal to be part of any forthcoming infrastructure legislation.
To learn more about FIRPTA, please visit our advocacy page.
- Sharon Wilson Géno Written Testimony on Behalf of the NMHC and NAA to the Senate Committee on Finance Hearing Entitled Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families
- IRS Proposed Regulations Real Estate Letter
- Coalition Letter Regarding EBITDA Standard for Business Interest Deductions
- Office Conversion Legislation Introduced in the Senate
- Real Estate Coalition Letter on Reconciliation Package Carried Interest Rule