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U.S. Eases 35-Year-Old Real Estate Tax on Foreign Investors

  • Change seen heralding greater cross-border investment
  • Foreigners have made 16% of U.S. property purchases in 2015
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Photographer: Andrew Harrer/Bloomberg
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President Barack Obama signed into law a measure easing a 35-year-old tax on foreign investment in U.S. real estate, potentially opening the door to greater purchases by overseas investors, a major source of capital since the financial crisis.

Contained in the $1.1 trillion spending measure that was passed to avoid a government shutdown is a provision that 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.