NMHC/NAA this week joined our real estate partners in urging Congress to reduce the barriers of the Foreign Investment in Real Property Tax Act (FIRPTA) on foreigners investing in U.S. real estate as they consider extending highway funding beyond July. Specifically, because FIRPTA relief would spur billions of dollars in infrastructure spending, it would be a natural fit for legislation designed to finance a long-term reauthorization of highway spending.
Currently, foreign investment in U.S. real estate is discouraged because FIRPTA taxes gains on the income earned from, and the sale of, real estate nationwide. This inhibits multifamily and other real estate companies from tapping into foreign capital - an important source for developing, upgrading and refinancing properties.
As a result, the real estate industry requested that the House Ways and Means and the Senate Finance Committee include FIRPTA reforms like those included in legislation recently introduced by Representatives Kevin Brady (R-TX) and Joe Crowley (D-NY). The measure would stimulate investment by increasing from 5 percent to 10 percent the ownership stake that a foreign investor may take in a U.S. publicly traded REIT without triggering FIRPTA. It would also remove the tax penalty that FIRPTA imposes on foreign pension funds that invest in U.S. real estate.
Importantly, the Senate Finance Committee approved a similar FIRPTA measure in February that is awaiting floor action. The Senate version of the bill includes the provision shielding REIT investors from FIRPTA, but drops the proposal benefiting foreign pension funds.
- Recently Introduced FIRPTA Repeal Bill Could Unlock Billions in Foreign Capital
- NMHC and NAA Urge House to Repeal FIRPTA
- Real Estate Coalition Letter Regardin g FIRPTA March 2019
- Multifamily Industry Highlights Infrastructure Tax Priorities with Ways and Means Committee
- Omnibus Spending Bill Contains Several Multifamily Victories