In what could be a significant boon for real estate and infrastructure fundraising, the White House has unveiled a broad package that includes a proposal to place foreign investors on “equal footing” with US taxpayers when selling real property investments.
President Obama’s plan, unveiled in Miami last week, aims to eliminate a 10 percent withholding tax that foreign investors suffer on the sale of US real estate and infrastructure assets. The tax was introduced under the 1980 Foreign Investment in Real Property Tax Act (FIRPTA), an outdated law originally designed to limit foreign control of US farmland, according to advocacy group The Real Estate Roundtable, which for years has pressured lawmakers to reform the bill.
In a press release, the White House said FIRPTA was regularly cited by foreign investors, including large pension funds, as a reason not to invest in US real property. It is unclear whether the President’s “Rebuild America Partnership” plan will require Congressional approval, or if the proposals can be implemented via executive action. A White House spokesperson was not immediately available for comment.
The President’s plan “recognized the positive role that foreign investors can play in re-capitalizing US commercial real estate and bringing in fresh capital for much-needed infrastructure repair and modernization,” said Real Estate Roundtable head Jeffrey DeBoer in a responding statement.