Restrictions on Foreign Investment in U.S. Real Estate

Foreign investment is a major source of capital for U.S. commercial real estate, leading to job creation and economic growth for communities throughout our nation. Some policy measures at the national and state level have sought to restrict, sometimes successfully, foreign investment in U.S. real estate to protect the nation’s economic, military, and civil interests.    

Position

While The Roundtable supports efforts to protect the nation’s economic, military, or civil security and the integrity of commercial real estate investments, we have concerns about rules that may hinder foreign investment in U.S. real estate by legitimate enterprises and capital formation by law-abiding entities. 

Background

National programs and laws related to foreign investment include:

  • CFIUS: The Committee on Foreign Investment in the United States (CFIUS) has jurisdiction over certain real estate transactions involving the purchase, lease, or concession to a foreign person in the United States.
  • Sovereign Wealth Funds: In July 2023, Senate Finance Chairman Ron Wyden introduced legislation that would repeal tax rules applicable to foreign governments and their investment arms (“sovereign wealth funds”) if that government has more than $100 billion invested globally, and does not qualify for an exception. The Roundtable opposes this legislation.
  • Taxation of Foreign Investment in U.S. Real Estate: The Foreign Investment in Real Property Tax Act (FIRPTA) is a discriminatory tax regime that imposes a tax on foreign persons disposing of U.S. real estate assets. Congress should dramatically scale back, or repeal FIRPTA altogether. It serves no legitimate policy purpose and reduces capital available for creating jobs, improving U.S. properties, and strengthening U.S. infrastructure. Further, Congress should avoid disrupting long-standing tax laws that exempt foreign governments from tax on their passive real estate investments in the U.S. These rules are grounded in basic principles of sovereign immunity. Sovereign wealth funds’ investments in U.S. real estate support jobs, housing, and economic growth. 
  • EB-5 visa program: The EB-5 Reform and Integrity Act set new program requirements to safeguard national security, deter fraud, and promote urban and rural development with EB-5 financing provided by overseas investors. The Roundtable strongly supported the 2022 reinstatement and major overhaul of the EB-5 investment visa program. 
  • State law — The Roundtable is analyzing the repercussions of a Florida bill that imposes restrictions on persons or entities from certain foreign countries of concern, including prohibitions on the ownership of agricultural land and certain real property. Other states are considering similar efforts.

For more information and recent updates, reference our resources below.

Resources

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