Real Estate Reciprocity Act

Real Estate Reciprocity Act

This bill establishes a federal excise tax and information reporting requirements related to the acquisition of real property in the United States by certain persons from countries that prohibit U.S. citizens from owning property (disqualified country).

The excise tax is 50% of the amount paid for the real property by a disqualified person. A disqualified person is

• a citizen of a disqualified country (other than a U.S. citizen or lawful permanent resident);
• an entity domiciled in a disqualified country; 
• a disqualified country; and
• a political subdivision, agency, or instrumentality of a disqualified country.

Under the bill, a disqualified person includes an entity if disqualified persons own (in the aggregate) more than 10% of the entity’s stock. For such an entity, if no more than 50% of the entity’s stock is owned (in the aggregate) by disqualified persons, the excise tax is prorated. 

The bill provides exceptions from the excise tax for (1) persons in the United States due to diplomatic obligations or a grant of asylum, and (2) certain corporations with stock traded on an established U.S. securities market. 

The bill requires information related to the acquisition of U.S. real property by a presumptively disqualified person to be reported to the Internal Revenue Service by persons responsible for closing the transaction or the transferor of the property. Additional reporting requirements apply.

A presumptively disqualified person is any person unless an affidavit is submitted (under penalty of perjury) that such person is not a disqualified person.