Policy Issues

Industry Coalition Urges Congressional Tax-Writers on Need for IRS to Withdraw FIRPTA "Look-Through" Proposal

March 1, 2023

The Real Estate Roundtable and a coalition of 14 industry groups urged congressional tax-writing committees on March 1, 2023 to contact the Treasury Dept. and IRS to request immediate withdrawal of a proposed IRS rule that would retroactively rewrite established law on determining whether a qualitied investment entity is domestically controlled. (March 1 coalition letter to Congress)

Threat to Real Estate Investment 

  • The proposed IRS Look-Through Rule would override congressional intent and rewrite decades of existing tax law related to the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980.  The proposal threatens to put jobs and communities at risk by harming property values, reducing the construction of affordable housing, and undermining jobs and investment in U.S. real estate. (IRS REG-100442-22)
  • Under the proposed regulation, for the first time, the government would “look through” a taxpaying U.S. C corporation that is a shareholder of a REIT and treat the domestic corporation as a “foreign person” if it has foreign shareholders. 
  • When Congress enacted FIRPTA in 1980, it exempted sales of domestically controlled real estate investment trust (DC REIT) stock when less than half of its stock (by value) is owned by foreign persons."

Retroactive Rewrite 

  • The March 1 coalition letter to members of the congressional tax-writing committees urged them to contact the Treasury Dept. and IRS to request immediate withdrawal of the proposal. 

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