Global Public Policy
On October 29, 2019, ICSC member company Unibail-Rodamco-Westfield hosted a panel of policy experts in Washington, DC, to discuss how to encourage more foreign investment into U.S. real estate.
The panelists, including Darin Mellot, Director of Research for CBRE – another ICSC member company – argued for ending an outdated tax law known as the Foreign Investment in Real Property Tax Act (FIRPTA).
FIRPTA was passed in 1980 over concerns that foreign investors were buying culturally and strategically significant American real estate. The law imposes burdensome regulatory requirements on foreign investors’ gains in real estate, but not on other U.S. assets, like stocks and bonds.
Not all foreign investors have been deterred from investing in U.S. real estate, but many more have opted to invest in other U.S. asset classes or take their money elsewhere. A mere 3% of all foreign investment went to real estate in 2018.
The panelists pointed to economic research that the repeal of FIRPTA could unlock as much as $100 billion in new foreign capital, with more than half likely to go to smaller and mid-sized metropolitan areas. Because infrastructure projects are typically classified as real estate for tax purposes, this money could also help fund much needed repairs and upgrades to American roads, bridges, and electrical grids.
ICSC supports the Invest in America Act (H.R. 2210) to repeal FIRPTA. The legislation was introduced by Rep. John Larson (D-CT), an influential member of the U.S. House Committee on Ways and Means that oversees federal tax laws, and is estimated to create as many as 250,000 new jobs in the U.S.