Unfortunately the study did not quantify how much the commercial real estate markets could expect to receive if the tax were modified or repealed--information that would be very helpful as industry advocates press Congress for changes to the law.

"There is no way you can pinpoint that number," David Pearce, VP and counsel for the Real Estate Roundtable, tells GlobeSt.com. "There is no way to know, for example, that, say, the Belgian or Canadian pension fund would have invested an additional amount of money if only it weren't for the tax." Still, though, he adds, given the tremendous gap created by the dearth of CMBS financing, any bit of additional capital would be helpful.

It is safe to assume, though, that the high tax barriers are keeping at least some foreign investment away from US markets. The study, "How FIRPTA Reform Would Benefit the US Economy," authored by economists Martin Neil Baily and Matthew J. Slaughter, found that due to FIRPTA, a non-US investment in US real estate can be levied by an effective tax rate as high as 54.5%--an initial 35% tax on the gains from the real estate investment, plus additional tax on the after-tax proceeds. Compared to much more favorable tax rates on other asset classes in the U.S., real estate is a less-favored asset class--absent some relief from this high-cost tax structure, the study found.

Measures suggested by the authors include outright repeal or at the very least an initial holiday--such as declaring that new foreign investments in US commercial real estate over the next five years would be exempt from FIRPTA.

According to Pearce, the Roundtable has been talking with members of the House and Senate as well as the Treasury Department about this issue. He is hopeful legislation may be taken up next year.