Could repeal of FIRPTA help the recovery of this nation's real estate market? In this morning's Globe St. News, the subject was FIRPTA (Foreign Investment in Real Property Tax Act), the 1980 measure that adds a layer of tax on the sale of any real estate owned by a non-citizen of the U.S.
The article cites a study by two economists that calls for a reform of FIRPTA to encourage more foreign investment in the United States real estate market.
Would it be so bad, since the U.S. real estate market is basically "on sale," to encourage investment groups from abroad to buy our distressed properties? Do we put an extra tax that is 10% or more on gold, sugar, wheat, etc?
In my opinion, the 1980 provision was reactionary, imposed at a time when we had a nation reeling from financial crisis and seeing large real estate assets being purchased right & left by foreign investors - primarily Japanese interests. Protecting national interests is one thing...technology, software, certain industrial products, etcetera, but to slap a huge tax on property is anti-market - going against the very grain of what we espouse when expecting other countries' markets to be open to us.
There are those who will cry that foreign investment will drive prices up, or shut locals out of the market - but my feeling is that open markets are better for everyone in the long run...and we have properties that need to move instead of languishing vacant or uncompleted.
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