WASHINGTON, DC-One of the last bills the House ofRepresentatives passed before it convened for August recess was theReal Estate Jobs and Investment Act of 2010--a wide sweeping namefor a bill that is very narrowly defined. Its targeted approach maywell have been the reason why it passed the usually fractious Housewith an overwhelming 401 to 11 vote. However, when the campaignbill is introduced in the Senate, industry advocates are hoping tosee its reach broadened.

|

Even as is, however, the bill is a pleasing accomplishment forthe real estate industry. It advances the long-held goal ofincreasing foreign investors’ allowable ownership interest in aREIT. The bill doubles that level to 10%. Anything over that amountis then subject to the Foreign Investment in Real Property TaxAct.

|

Getting this expansion was one of the Real Estate Roundtable’slegislative goals for the year. Still, though, chairman Jeff DeBoertells GlobeSt.com that the bill is also valuable because it willgive the industry another legislative vehicle on which to attachadditional reforms as it moves into the Senate and then onwardthrough the rule-making process. "The bill itself is good but it istargeted and narrow,” he says. “I think it will really pay off ifmore meaningful measures are attached.”

|

The driver behind the bill’s passage in the House stemmed, inlarge part, from the hope that it would spur additional foreigninvestment in US commercial real estate with minimal fiscal impact.In a GlobeSt.comblog published earlier this year, Sam Chandan, head ofReal Capital Analytics, pointed to an analysis by Martin Neil Bailyof the Brookings Institution and Matthew Slaughter of DartmouthCollege--both of whom have served on the Council of EconomicAdvisors. In their report, entitled "How FIRPTA Reform WouldBenefit the US Economy," Chandan wrote, "the authors recommendreforming the current system: outright repeal or, lessdramatically, an initial holiday could be implemented: e.g.,declare that new foreign investments in US commercial real estateover the next five years would be exempt from FIRPTA. We think thatthe sizable economic benefits of reforming FIRPTA would exceed thesmall fiscal costs it would entail."

|

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.