Rep. Devin Nunes and House Republicans Encourage Regulatory Reform that will Ignite Capital Investme

IRS Notice 2007-55 penalizes international investment in real estate and stifles investment in mid-sized and gateway markets

WASHINGTON, DC – February 27, 2020, This week, Congressman Devin Nunes (R-Calif.) joined by key Republican members of the House Ways and Means Committee sent a letter to Treasury Secretary Steve Mnuchin urging the withdrawal of Section Two of IRS Notice 2007-55.

Withdrawal of the notice has garnered broad support from real estate industry experts and members of Congress. The letter reads in part:

"As the Department of the Treasury undergoes its review of Federal regulations to identify ways to reduce tax complexity and burdens while spurring economic growth, we respectfully request that the Department withdraw Section Two of IRS Notice 2007-55 (the "IRS Notice") pertaining to the treatment of liquidating distributions of a real estate investment trust (REIT). This provision subjects a liquidating distribution made by a REIT to a foreign taxpayer (which is essentially the sale of shares of stock in the REIT) to a punitive tax that is not levied on other similar types of investments. In our view, repealing the IRS Notice will restore the intent of Congress with respect to the tax law governing liquidations, provide parity to investors, and increase direct foreign investment in U.S. commercial real estate and infrastructure in every comer of the nation."

The full letter is linked here:

Advocates of withdrawing the notice believe that economic growth under President Trump can see even greater gains by withdrawing IRS Notice 2007-55. In 2007, the IRS published Notice 2007-55 without industry input and up-ended 30 years of precedent. This punitive notice unfairly expanded a higher tax on global investors in real estate than on any other asset class, blocking new international investments in real estate companies supporting multifamily housing, infrastructure, and many other forms of commercial real estate.

The same tax burden is not placed on international investors when they liquidate their investments made in other American enterprises such as Google, Under Armour or Best Buy. Despite a decade of industry protest and the Trump Administration’s success in withdrawing burdensome regulations like Notice 2007-55, the notice remains in effect and continues to stifle growth.

This punitive tax continues to stifle foreign direct investments in infrastructure spending in America’s mid-sized markets. Modest reforms to such taxes under The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) saw a measurable increase in investment to mid-sized communities. Investment increased in not only larger cities like New York, but smaller markets like Austin, Charlotte, Nashville and Memphis also saw meaningful increases in property sales. Withdrawal of Notice 2007-55 would bring similar results: long term job creation, revitalized communities and an even healthier economy.

Contact: Dee Dee Bass Wilbon Email:

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