President Obama recently signed a law that will ease taxes and making foreign investment in USA real estate easier. This changes a 35 year-old tax on foreign investors, and could potentially open the door to even more investors from overseas. Foreign investors play an important role in spurring the US economy.
The provision treats foreign pension funds the same as their U.S. counterparts for real estate investments. The provision waives the tax imposed on such investors under the 1980 Foreign Investment in Real Property Tax Act, known as FIRPTA.
The new law also allows foreign pensions to buy as much as 10 percent of a U.S. publicly traded real estate investment trust without triggering FIRPTA liability. Previously, they could only buy up to 5 percent.
According to Real Capital Analytics, foreign real estate buyers have invested in around $78.4 billion of real estate this year, for 16 percent of the total $483 billion invested in real estate across the nation. These numbers have surged since 2009, when just $4.7 billion was from foreign investors.
The change “is a huge deal,” said Jim Fetgatter, chief executive of the Association of Foreign Investors in Real Estate. “There’s no question” it will increase the amount of foreign investment in U.S. real estate, he said, according to Bloomberg News.
Foreign buying this year as a percentage of total investment in U.S. real estate is about double the 8.1 percent average in the 10 years through 2012.
In Miami, we have seen many foreign real estate buyers coming to the city to invest in real estate. Buyers have come from many places all over the globe, from China to Canada and South America. The new law will make foreign investment in USA real estate even easier, and that will help the real estate market and economy across the country.
If you are interested in investing in real estate in Miami, check out what RE/MAX Paradise has to offer and contact us today!