On Thursday, April 30th, two senior members of the House Ways and Means Committee, Kevin Brady, R-Tex., and Joe Crowley, D-N.Y., reintroduced legislation, the Real Estate Investment and Jobs Bill of 2015 (HR 2128), that would remove a 1980s era tax provision that discourages foreign investment in U.S. real estate.
The legislation doubles the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) tax exemption from 5 percent to 10 percent for foreign shareholders in U.S. public real estate investment trusts (REITs) and exempts foreign pension funds from the FIRPTA tax entirely.
Reps. Kevin Brady and Joe Crowley said their bill would alter FIRPTA, 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 FIRPTA tax foreign pension funds investing in commercial real estate.
In the 113th Congress, the Real Estate Investment and Jobs Bill of 2013 (HR 2870) was cosponsored by 69 House members, 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 Bill and the House passed a similar bill in 2010 by a vote of 402-11.
“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,” Brady said in a statement. “Modernizing FIRPTA and encouraging foreign investment will boost job growth and expand our local economies.”
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.
Provided by CCH