NAR backs changes in foreign investment taxation
WASHINGTON – May 16, 2014 – Legislation to amend the Foreign Investment in Real Property Tax Act (FIRPTA) – which was enacted in 1980 to create tax equity for domestic and foreign buyers of U.S. property – is under discussion in the U.S. House and Senate. If a bill passes, it would allow foreign investors to own up to 10 percent of stock in a U.S. Real Estate Investment Trust (REIT) without FIRPTA tax obligations when the securities are sold, a tax shield increase from the current level of 5 percent.
The National Association of Realtors® (NAR) backs that proposed measure, Russell Riggs, senior regulatory representative for NAR, told the association's Global Business Alliances Committee during the Realtor Party Convention and Trade Expo in Washington, D.C.
Originally enacted to alleviate concerns about rising foreign purchases of U.S. farmland, FIRPTA attempts to level the playing field between domestic and foreign real estate investors by levying a 10 percent tax on the "amount realized" by foreign investors if they sell a property for more than $300,000.
Historically, NAR has not taken any position on FIRPTA. But in light of recent discussions by policymakers and legislators to change or possibly repeal it, a work group composed of select members of the Federal Taxation, Commercial and Global Business and Alliances Committees was formed last year to review the FIRPTA proposals.
The conclusion reached by the workgroup, backed by NAR's Government Affairs department, was that passage of the bills represents the best possible approach for Realtors.
"We don't want to get rid of FIRPTA," Riggs said. "We want to make it work better."
For more information about FIRPTA, visit the IRS website.
Source: Brian Summerfield, Realtor® Magazine
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