Bipartisan Senate Letter Urges Treasury to Withdraw IRS Notice Hindering Foreign Investment in U.S. Real
December 18, 2019
Eleven Senators sent a bipartisan letter on Dec. 18, 2019 urging Treasury Secretary Mnuchin to withdrawal section 2 of IRS Notice 2007-55, which applies U.S. capital gains tax to certain types of inbound real estate investment transactions that were previously treated as nontaxable under the Foreign Investment in Real Property Tax Act (FIRPTA).
The letter, led by Sens. Johnny Isakson (R-GA) and Robert Menendez (D-NJ), notes, “This unintended tax burden discourages foreign investors from putting capital to work to create jobs and improve our communities.”The group of Senators, which includes Senate Banking Committee Chairman Mike Crapo (R-ID) and the Democratic co-chair of the Senate Real Estate Caucus, Senator Ben Cardin (D-MD), requests that Treasury restore Congress’s intended treatment of liquidating REIT distributions, encourage increased foreign investment in U.S. real estate, and further spur job creation in the United States by reversing the IRS Notice. According to the Senators, “trillions of dollars in global capital are estimated to be available that could be invested in the U.S. real estate market. Our tax policies should welcome such investment, not discourage it.”
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