Recently an American client asked me to assist with the acquisition of real estate in a mountain lake region of Austria. As I began the process I was surprised to learn that a U.S. entity or U.S. citizen may not own real estate in Austria (with an exception for people who have dual citizenship). This is not an ad hominem obstacle to U.S. investors.

With certain exceptions for treaty countries, the same prohibition applies to all non-Austrian persons or entities. These restrictions vary from province to province but as a region of natural beauty and tourist interest this province is particularly restrictive.

While attending the annual meeting of the International Society of Hospitality Consultants, an Austrian colleague explained that this restriction is aimed at preventing the region from being a "tourist ghost town" with non-resident owners who would generate multiplier effect for the local economy.

Needless to say, with the help of local Austrian counsel we were able to achieve the client's objectives but the restrictions led me to think about restrictions on the foreign ownership of real estate. In the United States, jurisdictional assets have always been sought as a safe haven for foreign investors. However, in the 1980s, there was considerable anxiety about the volume of investment by foreigners in U.S. trophy commercial real estate. It was during this period that the Foreign Investment in Real property Tax Act (FIRPTA) was enacted to tax non-U.S. citizens and entities on their U.S. real property gains.

In this period of rising nationalism and some sentiment in favor of trade restrictions, might there be an emergence of regulation restricting foreign ownership of real estate, here and throughout the world where immigration restrictions are under intense scrutiny? It is certainly something to watch for and to consider what policy implications of ownership restrictions really are.

Originally published November 4, 2016

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