IRS Proposes FIRPTA Exemption Regulations for Qualified Foreign Pension Funds

On June 6, the IRS and Treasury Department published proposed regulations with respect to the exemption from FIRPTA for qualified foreign pension funds (QFPFs) enacted by Congress as part of the Protecting Taxpayers from Tax Hikes Act of 2015 (PATH Act). These proposed regulations generally take a broad view of QFPFs and favorably address most, if not all, of Nareit’s 2016 recommendations to the IRS and Treasury Department. For example, the regulations would permit foreign pension funds to invest through multiple tiers of entities while still maintaining exemption from FIRPTA. Similarly, the regulations would retain the exemption from FIRPTA when several foreign pension funds invest in U.S. real estate through a “qualified controlled entity.”

A taxpayer may rely on the proposed regulations with respect to dispositions or distributions occurring on or after Dec. 18, 2015, and prior to the applicability date of the final regulations, if the taxpayer consistently and accurately complies with the rules in the proposed regulations. Nareit is forming a task force to consider providing comments on these proposed regulations, which are due Sept. 5, 2019. If you would like to participate on this Nareit task force, please email Kimber Brewer.

(Contact: Dara Bernstein at dbernstein@nareit.com)

The Nareit Developments section on reit.com provides updates of Nareit's activities and key events impacting the REIT and commercial real estate industry. Nareit is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets. Please see our Terms of Use.