FIRPTA real property taxation relief proposed by U.S. legislators

17 décembre 2015

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In an attempt to arrive at an agreement before the Christmas break, negotiators from the U.S. House of Representatives and the U.S. Senate released on December 15, 2015 statutory language as well as a summary of so-called tax extenders, in a bill entitled “Protecting Americans from Tax Hikes Act of 2015” (the Tax Extender Bill).

Similar to the proposed amendments introduced on December 7, 2015 in H.R. 34, the Tax Extender Bill provides some relief from Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) taxation.  Section 322 of the Tax Extender Bill would increase the maximum stock ownership a shareholder may hold in  publicly traded  REIT to avoid being subject to the FIRPTA tax from the current  5 percent  threshold to 10 percent and section 323 of the Tax Extender Bill would also exempt foreign retirement and pension funds from FIRPTA taxation.

In addition, section 324 of the Tax Extender Bill provides that the rate of withholding on dispositions of United States real property interests will be increased from 10 percent to 15 percent.  The increased rate of withholding, however, would  not apply to the sale of a personal residence where the amount realized would be $1 million or less, and if enacted in its present form, would be  effective for dispositions occurring 60 days after the date of enactment.

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