One of the primary reasons for the more modest amount of Non-US Investor capital being invested in US real estate assets is the US Foreign Investment in Real Property Tax Act of 1980 (known as FIRPTA).2
FIRPTA taxes Non-US Investors on gains from US
real property investments, including gains derived from many real estate investment funds, at effective rates up to 54.5%. Another reason, and perhaps even a greater
impediment for many Non-US Investors, is FIRPTA’s requirement that an investor file US tax returns and submit to the investigatory and subpoena powers of the IRS, an unwanted intrusion for nearly every Non-US Investor.