While NAR has existing policy on immigration reform that touches on the principles that should ideally govern the taxation of foreign citizens investing in U.S. real estate, no policy explicitly mentions the Foreign Investment in Real Property Tax Act (FIRTPA). The question of whether NAR should support pending legislation designed to attract more foreign investment to the U.S. commercial real estate market by easing certain restrictions under the existing FIRPTA rules was addressed earlier this year by a working group comprised of members from NAR’s Federal Taxation Committee, Commercial Committee, and Global Businesses & Alliance Committee.
The working group was convened to study and understand the FIRPTA law, and to make recommendations as to whether any changes were warranted. The working group resulted in four recommendations that were presented and approved at the REALTOR® Party Convention & Trade Expo in Washington, DC in May 2014.
Working Group Recommendations:
NAR believes the interests of its members are best served by tax policies that encourage foreign investment in U.S. real estate and that provide, to the extent practicable, similar taxation between U.S. investors and foreign investors in U.S. real property. NAR policy should be guided by the following principles:
1. NAR policy supports the rights of foreign citizens to acquire, own and sell U.S. real property and the right of U.S. citizens to acquire property outside the U.S. NAR also supports the free flow of international capital for real estate and oppose laws and regulations that impede that flow.
2. NAR policy states all resident owners of U.S. real estate should be subject to the same set of rules under the U.S tax system. In addition, any unique reporting and disclosure requirements regarding foreign buyers and/or their agents should be kept to a minimum.
3. NAR believes all U. S. and foreign investors in U. S. real estate should be subject to similar sets of rules under the U.S. tax system.
4. NAR supports policies that encourage foreign direct investment in U.S. real estate through Real Estate Investment Trusts (REITs) that do not materially encroach upon the principle that all U.S. investors and foreign investors in U.S. real estate should be subject to similar sets of rules under the U.S. tax system.
For more information, contact Evan Liddiard, NAR’s Senior Policy Representative-Federal Taxation at 202/383-1083 or firstname.lastname@example.org.