December 23, 2015, No. 2015-41.Canadian investors that own U.S. real property and U.S. REIT shares may benefit from significant changes to the U.S. federal income tax rules on foreign investment in U.S. real property (the Foreign Investment in Real Property Tax Act or “FIRPTA”).
For example, “qualified foreign pension funds”, which may include Canadian pension funds, are now entirely exempt from U.S. federal income tax on sales of U.S. real property interests as well as real estate investment trust (REIT) distributions attributable to gains from dispositions of U.S. real estate.
Additionally, non-U.S. investors may now generally hold up to 10% (formerly 5%) of publicly traded REITs without being subject FIRPTA tax on dispositions of such REIT stock and on distributions from such REITs that are attributable to gains from dispositions of U.S. real estate.
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Information is current to December 23, 2015. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.