House lawmakers, by a vote of 402 to 11 on July 30, approved the Real Estate Jobs and Investment Bill (HR 5901), sponsored by House Ways and Means member Joe Crowley, D-N.Y. The bill would exempt certain stock of real estate investment trusts (REITs) from the tax on foreign investment in U.S. real property. Under current law, foreign investors can own up to a 5-percent stake in a REIT before they are subject to a higher tax rate. The measure would allow a 10-percent stake before the higher tax kicks in.
The cost of HR 5901 would be offset by tightening levy rules on federal contractors. The IRS would be allowed to issue levies prior to a collection due process hearing on federal contractors with tax liabilities. The levy provision would raise $1.06 billion, thereby offsetting the $995-million cost of the REIT stock provision, according to an estimate by the Joint Committee on Taxation. In remarks on the House floor, Crowley said the bill would attract new capital by alleviating taxes that discourage investment in the nation’s commercial real estate market.
“This bill will not open the door to another Dubai port situation, or to greater control of U.S. real estate by countries who do not have our best interests at heart,” Crowley said. “This is not ownership control by any means.” Committee member Kevin Brady, R-Tex., said the legislation will help owners of commercial real estate raise capital from foreign investors by removing unnecessary barriers to investment. Brady said that he is unaware of any industry groups that objected to the revenue offset for the bill.
By Stephen K. Cooper, CCH News Staff
