Browse Tag: Investment

Free Live Webinar: FIRPTA, PATH Acts Compliance

The recent changes to the Foreign Investment in Real Property Tax Act (FIRPTA) that came with the 2015 Omnibus Spending Bill are making waves in commercial real estate investment circles.  Stay on top of what the changes mean to private equity, real estate and mutual fund investors and managers. The ins and outs are many and complex –  if a REIT or a RIC (“regulated investment company”) is on your radar screen, the changes to FIRPTA are probably worth knowing about.

Mark the date: on Tuesday, April 12, 2016 at 2:00 pm EST, the National Association of REALTORSⓇ has scheduled a free live webinar on the very topic.  Presenters include Evan M. Liddiard, CPA, NAR’s Senior Policy Representative on Federal Taxation. and Linda Monaco, Esq., Legal Education Attorney.

The Protecting American Taxpayers From Tax Hikes Act (PATH), enacted in December 2015, included several important changes to the Foreign Investment in Real Property Tax Act. The Path Act changes mean more foreign investment in U.S. real estate but also some compliance headaches. FIRPTA imposes a withholding tax on foreign persons disposing of real property in the U.S. This webinar will explain the reasons behind the changes and also teach everything you need to know about complying with the new rules. It will discuss recent changes to FIRPTA made by Congress, the tax implications for residential and commercial buyers and sellers, and practical “nuts and bolts” information about how to comply.

Register Now

To register for this free NAR webinar on April 12, click here. 

The Rising Respectability Of The Blockchain

In today’s commercial real estate, large technology systems used for high-volume financial settlements are not a great fit. As an asset class, commercial property’s tendency toward illiquidity carries a peculiar anti-technological bias. In CRE, most financial settlements occur in the process of property transactions such as purchases or leases. These tend to have lifetimes measured in months and years, as opposed to stocks and bonds, where ownership and packaging can repeatedly change on the basis of seconds and minutes.

The added volume and complexity that comes with comparatively liquid stock and bond markets has been a driver for the creation of high-technology settlement systems that tick along in the background of Wall Street.  These back-office utility systems are seldom thought of, but in fact provide market participants with a critically important service: the bedrock truth about ownership and transactions.

In the CRE world, comparable truth is about keeping track of payment, escrow and title. By and large, these mechanisms are designed into contracts known to the parties, crafted to describe an immediate future where the players are unlikely to change.

That said, not everything here runs at the speed of paper.  The industry has developed its own investment vehicles – REITs, private equity, CMBS, crowdfunding – and can be expected to create more in the future.  When those vehicles are created, expect to see greater involvement of the blockchain.

What’s the Blockchain?

Today, when money moves into or out of a transaction, we update at least one ledger. That ledger could be a hand-built Excel sheet, it could be a database system containing all transactions, it could even be paper, presuming you’ve got a goose quill to match. Typically, ledgers are, like most accounting, private.

The blockchain is a very modern software mechanism to conduct payments, accounting, escrow, repurchase, even title, in full view of all parties, subject to contract rules. Consider it a distributed ledger. It operates in public, heightening transparency of transactions.  It can be automated, meaning the funding, for example, of escrow accounts ahead of dependent transactions found in leases or purchase agreements can be made automatic, potentially speeding up the transaction and heightening financial predictability.

Growing past its origins as part of the digital currency called Bitcoin, the blockchain’s features are attracting attention from increasingly heavy hitters in finance.

Getting Ready For Prime Time

In a sign that the blockchain is maturing, it is now being offered as a primary technology by a giant among those back-office settlement systems I mentioned earlier. DTCC, the Depsitory Trust & Clearing Corporation provides a raft of services to financial markets, including the tracking of repurchase agreements between banks. With this week’s announcement, DTCC will be offering the blockchain as the means by which counterparties will conduct automated repurchase business, a kind of short-term financing where debt bounces between opposite ends to meet a goal.

This doesn’t mean anything’s changed in commercial real estate, but it does mean the blockchain’s features are going to get their moment in the mass-financial-market sun.  How well the blockchain does at delivering predictability, liquidity, transparency and other features that mark popular investment vehicles is a great indicator for how much change is on the horizon for CRE –from leases to securitization and everywhere in between.

Source: Blockchains, Teens and Hedge-Fund Hotels – Bloomberg View

Learn About The EB-5 Regional Center Near You

George H. W. Bush

In 1990, President George H.W. Bush signed into law the 1990 Immigration Act, which included a novel provision to attract foreign investment and create jobs in areas that most need them.  The EB-5 Visa program is a way for foreign investors to earn a green card if they invest in the economic development of a “targeted employment area” (TEA), defined by the program administrators, the US Dept. Of Citizenship and Immigration Services (USCIS) as:

“…an area which, at the time of investment, is a rural area (not within either a metropolitan statistical area (MSA) (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more), OR an area within an MSA or the outer boundary of a city or town having a population of 20,000 or more which has experienced unemployment of at least 150% of the national average rate.”

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