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.
Specializing in Buyer Representation in the Tucson, Arizona real estate market.
"Never forget - Real Estate Is About People"
Howdy there Kent
Will I'm not really for lifting that there tax. But if it should be, it'll help my new business. With whats just around the corner for the Real Estate Market. Which could very will, make what we're seeing right now. Seem like a walk in the park.
Hi Dale - thanks for coming by. All in all, I'm a free-market capitalist. I believe that protectionism slows down the flow of capital and encourages country after country to clog the halls of commerce with exceptions. Large tax burdens placed upon outside capital tends to lead foreign investors to invest in other directions when the U.S. would be their first choice otherwise.
Especially in a time where our economy needs a serious capital infusion (instead of producing more long-term national debt), opening up an attractive investment segment will bring cash from other countries into the economy - which means jobs. Many of the world's major economies are experiencing a quicker recovery than our own...and money knows no borders. Like it or not, the world economy is a reality, and it is more powerful than a fence or map line. The sooner we realize that we're competing for capital instead of expecting dividends for being the biggest kid on the playground...the better off we will be.
Its about the jobs. Jimmy & Joe have food on the table, Frank and Billy want to feed their families too - and don't want a handout, they want to work.