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A federal law change will lift foreign investment in New York City real estate
April 30, 2015
If two bills amending the Foreign Investment in Real Property Tax Act are passed, foreign pension funds will be able to invest in U.S. real estate without having to pay capital-gains taxes.
A tax rule that real estate developers and owners believe discourages foreign investment in the U.S. appears on track to finally being loosened. The change would open the door to overseas money at a time when such buyers are increasingly investing in property in the city.
Two proposed bills that would change the Foreign Investment in Real Property Tax Act have passed through the U.S. Senate finance committee and will move for a vote by the Senate and U.S. House of Representatives by the end of the year. The amendments would allow foreign pension funds to invest in U.S. real estate without having to pay capital-gains taxes on the proceeds of those investments
The bills have been championed by real estate industry groups like the Washington, D.C.-based Real Estate Roundtable, as well as unions such as the International Union of Painters and Allied Trades, who would also benefit from increased investment activity.
"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, a powerful industry trade group, in a statement. "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."