Bipartisan Bill Lowers Outdated, Discriminatory Barrier in Tax Code
WASHINGTON, D.C. – May 1, 2015 – (RealEstateRama) — Two senior members of the House Ways & Means Committee are continuing their quest to remove a 1980’s era tax provision that discourages foreign investment in U.S. real estate.
Representatives Kevin Brady (R-TX) and Joe Crowley (D-NY) have re-introduced The Real Estate Investment and Jobs Act of 2015 (H.R. 2128).
The bill would alter the Foreign Investment in Real Property Tax Act of 1980 which requires foreign investors to pay taxes on profits earned when selling properties or real estate securities in the United States. It also exempts from the FIRPTA tax foreign pension funds investing in commercial real estate.
Says Brady, “In a world of fluid global capital, the tax code shouldn’t discourage foreign capital from investing in U.S. commercial real estate, nor discriminate against it with higher taxes than other U.S. investments. Modernizing FIRPTA and encouraging foreign investment will boost job growth and expand our local economies.”
“The U.S. is among the world’s best places to invest – but foreign investments in commercial real estate are sorely behind other industries because of uneven tax treatment. What’s clear is that the law that is on the books does more harm than good, and something must be done,” said Rep. Crowley. “Our bill will encourage and lead to greater foreign investment in U.S. real estate and will help boost our economy in cities across the country.”
In a recent Association of Foreign Investors in Real Estate (AFIRE) member survey, 76 percent of respondents said that FIRPTA tax relief would spur their investment in U.S. real estate.
In the 113th Congress, the Real Estate Investment and Jobs Act of 2013 was cosponsored by 69 Members of the House of Representatives (36 Republicans, 33 Democrats), including almost every member of the Ways and Means Committee. In February, the Senate Finance Committee unanimously passed a version of the Real Estate Investment and Jobs Act, and the House passed a similar bill in 2010 by a vote of 402-11.
The Real Estate Investment and Jobs Act of 2015 doubles the FIRPTA tax exemption from 5% to 10% for foreign shareholders in U.S. Public REITs and exempts foreign pension funds from the FIRPTA tax entirely.