Foreign real estate investors would get a big-time break if Congress okays a bipartisan bill that would back off the 35 percent capital gains tax on international buyers of commercial properties, the New York Observer reported.
The legislation proposes reforming the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980, which discourages global capital flow into the U.S. market.
“Restriction on foreign investment in America’s commercial real estate is a relic of the past,” Rep. Kevin Brady (R-Texas) said during a conference call heard by the Observer. Brady is working with Rep. Joseph Crowley (D-N.Y.).
FIRPTA imposes a 35 percent capital gains tax on international investors with commercial property interests.
“Congress singles out no other industry with negative tax treatment as we do the real estate industry,” said Crowley, adding that foreign investors didn’t face similar restrictions on stocks and other asset classes.
Heavy hitters from New York real estate, including the Real Estate Board of New York and and Brookfield Properties’ John Zuccotti, are backing the proposed legislation.
“Eliminating this provision will attract capital from people who want to invest in the United States,” Zuccotti said. “It will create a fair playing field for investment by foreigners.” [NYO] – Hiten Samtani