H.R. 5901: Real Estate Jobs and Investment Act

H.R. 5901

Real Estate Jobs and Investment Act

Sponsor
Rep. Joseph Crowley

Date
July 30, 2010 (111th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

The House is scheduled to consider H.R. 5901 on Thursday, July 29, 2010, under suspension of the rules, requiring a two-thirds majority vote for passage.  This legislation was introduced by Rep. Joseph Crowley (D-NY).

Bill Summary

This bill would increase from 5 percent to 10 percent the amount a non-U.S. Citizen may own of certain real estate investment trusts (REIT) to be exempted from the higher tax on foreign investments in U.S. real property interests.

Exception from Foreign Investment in Real Property Tax Act (FIRPTA) for Certain Stock of Real Estate Investment Trusts:

H.R. 5901 would allow for any stock in a real estate related investment held by a qualified shareholder to be treated as a U.S. real property interest except to the extent that the investor in the qualified shareholder holds more than 10 percent of the stock of a real estate investment trust.

Any distribution to a qualified shareholder would not be treated as a gain recognized from the sale or exchange of a U.S. real property interest to the extent that the stock of the real estate investment trust held by such qualified shareholder is not treated as a U.S. real property interest.

Application of Continuously Levy to Tax Liabilities of Certain Federal Contractors:

The bill would offset the exception from FIRPTA by allowing the Secretary to serve a federal contractor levy if a person whose property is subject to that levy is a federal contractor.

Background

Under current U.S. tax law, foreign investors generally do not pay capital gains taxes when they sell stock in a U.S. corporation.  Foreign investors with a stake in U.S. Real Estate Investment Trusts (REITs) — investment vehicles that are similar to mutual funds, are taxed more heavily.  Under current law, foreign investors are limited to a 5 percent stake in a REIT before they are subject to a higher tax rate

Cost

According to the Congressional Budget Office, H.R. 5901 would decrease the deficit by $143 million over five years, and $61 million over ten years