Current Legislation/Regulation
(bill number or regulation)
None at this time.

Legislative Contact(s):
Evan Liddiard
eliddiard@realtors.org(link sends e-mail)
202-383-1083

Regulatory Contact(s):
Evan Liddiard
eliddiard@realtors.org(link sends e-mail)
202-383-1083

What is the fundamental issue?
The Foreign Investment in Real Property Tax Act (FIRPTA) was enacted in 1980, initially as a response by Congress to concerns about increasing foreign ownership of farm land in the United States.The major purpose of FIRPTA was to establish equity of tax treatment in U.S. real property between foreign and domestic investors.  In the 114th Congress, FIRPTA repeal bills were introduced in both the U.S. Senate and House of Representatives which attracted a great deal of support from commercial real estate stakeholders in the country, as well as an unusually high number of bipartisan cosponsors in the Congress. These bills, the Real Estate Investment and Jobs Act, would have amended FIRPTA to allow more foreign ownership of Real Estate Investment Trusts (REITs). The legislation was limited to making it easier for foreign persons to invest in U.S. commercial real estate through REITs without having to pay tax under FIRPTA. These bills represented a relatively modest provision that stops far short of repealing FIRPTA; however, if enacted, the legislation would have somewhat eroded the equity of tax treatment that FIRPTA established. On the positive side, economists estimate this change could bring billions of dollars of additional investment in U.S. real estate from foreign investors, which could have a beneficial effect for the economy and all real estate.

FIRPTA repeal bills have not yet been introduced in the 116th Congress. 

I am a real estate professional.
What does this mean for my business?
Some economists believe that FIRPTA has harmed the U.S. commercial real estate industry and held back economic growth. The United States greatly trails other major industrial nations in the amount of commercial real estate investment from foreign sources. Moreover, the U.S. real estate sector enjoys just a small fraction of the amount of foreign dollars invested into other parts of our economy, such as manufacturing and financial services. In a survey done in early 2014, three-quarters of foreign investors who responded indicated that FIRPTA relief would have a major or a positive effect on U.S. real estate investment activity. Thus, enactment of the legislation should increase investment in U.S. commercial real estate, which in turn could have positive growth effects on residential real estate as well.

NAR Policy:
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.  NAR is supportive of enactment of The Real Estate
Investment and Jobs Act.  

Legislative/Regulatory Status/Outlook
The Real Estate Invewstment and Jobs Act enjoyed an unusual amount of support of Members from both parties and in both the Senate and the House in the 114th Congress (2015-2016). Ultimately, neither the House or the Senate bill was passed into law in the 114th Congress. 

FIRPTA repeal legislation was not introduced in the 115th Congress (2017-2018), and it has not yet been introduced in the current Congress.

NAR Committee: Federal Taxation Committee