Change in federal law could boost foreign investment in NYC
Pension funds from abroad may not have to pay capital-gains taxes
A newly proposed federal law would increase the appeal of investing in U.S. real estate for foreigners by eliminating certain taxes at a time when foreign investment is already on the rise.
The law would amend the Foreign Investment in Real Property Tax Act to enable foreign pension funds to invest in U.S. real estate without having to pay capital gains taxes on the profits, and would also allow them to buy bigger stakes in U.S. REITs without paying capital gains taxes, Crain’s reported. U.S. pension funds are already exempt from income taxes.
The measure has passed the Senate Finance Committee and should be voted on by the Senate and the House of Representatives by the end of the year.
“Passing an amendment to FIRPTA would unlock a significant amount of foreign capital that can be put to use for real estate development, improvements, and investments in New York City and across the nation,” said Steven Spinola, president of the Real Estate Board of New York. “We are encouraged by the unanimous passage of this bill by the Senate finance committee, and hope to see it passed by Congress and signed by the President soon.”
Colliers International’s Eastern region president Joe Harbert said, “We have a very busy market right now and it’s clear that changes in FIRPTA should kick up foreign investment here even more.”
Canadian pension fund Oxford Properties is a major investor in Hudson Yards. [Crain’s] — Tess Hofmann