Just recently Canada's Prime Minister Justin Trudeau had cautioned regarding the risk of curbing foreign real estate investments in their country without concrete evidence. In same manner, key players in the commercial real estate industry of the United States have been reportedly trying to convince the lawmakers to make some amendments on the Foreign Investment in Real Property Tax Act of 1980.
The said Property Tax Act was established in order to safeguard United States farmlands and other properties from being snatched by foreign investors like the Japanese investors during those years. And since times have changed according to some experts, it would be good to make some particular changes with the law. Via Wall Street Journal, Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at University of California, Berkeley stated that the said law is "a vestige of a long time ago," that is why changes should be made. According to WSJ;
"The changes in the omnibus spending package allow foreign pension funds-which already buy tens of billions of dollars of commercial property a year-to sell property without having to pay taxes along the way. In addition, foreign investors will be allowed to own as much as 10% of a publicly traded real-estate company before facing additional taxes, up from the 5% allowed under the prior law." And this "might increase it $20 or $30 billion a year-which is significant, but not overwhelmingly large," Mr. Rosen added.
However, despite some promising returns in the industry, others are still skeptical about the suggested changes in the provisions of the law. And also "lawmakers have stalled over how to deal with the lost tax revenue that would come from a change, and Congress hasn't passed many large tax bills in recent years," reported by WSJ. Guess we would have just to wait for the debate concerning this complex commercial real estate law, and hear the pros and cons of the suggested changes.
