LEGISLATION FOR FOREIGN INVESTMENT
International Investment in U.S. Real Estate
New legislative developments to boost foreign investment
By Janet Branton
Global real estate has been and will continue to be a
constantly shifting landscape; of that we can be sure. Current events continue to shape country economies, impacting capital flow and global markets. Five years ago, America’s economy was in the throes of a recession and foreign investment was the lifeblood of many local real estate markets. Now, the American dollar is stronger than most world currencies and is a more expensive destination to buy and own property. Yet, it remains one of the world’s most popular destinations to purchase real estate. Last year, foreign investors accounted for $104 billion in U.S. residential real estate; and $91 billion in commercial property purchases. China overtook Canada for the first time as the number one purchaser, accounting for $28.6 billion in purchases. This is partly due to the relative safety and security of our country’s politics, economy, and lifestyle. Among the many factors impacting demand for real estate, some of the more complex considerations relate to the laws and policies of various governments. From differences in tax treatments, to allowed investment strategies, or the ease of securing visas/residency status, all of these factors and more can play a significant role in where and how global buyers, especially of luxury properties, choose to acquire real estate. While there is much to say about each of the following legal/policy topics impacting real estate, I will provide a
brief overview of each, and encourage all of you to visit our web site, realtor.org, or our blog, theglobalview. blogs.realtor.org, for more comprehensive information on these topics.
Money Laundering An unfortunate reality of today’s market is the issue of real estate money laundering. Governments around the world are being forced to adapt or create new policies to help prevent suspicious activity. Wealthy buyers frequently use shell companies to take advantage of legal investment and tax strategies—or simply to maintain their privacy. However, they have also been used in money laundering schemes, designed to hide corruption and shelter criminal activity, including terrorism. In and of themselves, shell companies are perfectly legitimate. They can be created in the names of accountants, lawyers or relatives, making it nearly impossible to establish money sources. Also, shell company ownership can be shifted at any time without updating property records. Further, since many high-end transactions are made in cash, ownership can’t be traced through mortgage documents either. Typically, the first and most important layer of control for anti-money laundering (AML) and anti-terrorism financing (ATF) rests with banks and other financial NAWRB MAGAZINE |
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