LOS ANGELES-Proposed changes to the Foreign Investment in Real Property Tax Act (FIRPTA) could increase potential foreign investment in gateway markets such as New York and San Francisco, while providing a significant boost in core central business districts such as Chicago, according to a new report from CBRE Group Inc.

Under FIRPTA currently, foreign investors selling real estate in the U.S. are required to withhold 10% of a property's sale price to ensure payment of any taxes owed. The proposed changes to FIRPTA would exempt foreign pension funds (though not other foreign investors) from this requirement, freeing up the withheld capital for immediate reinvestment.

According to the report, Foreign Investment in Real Property Tax Act (FIRPTA): Proposed Changes Could Reallocate Foreign Investment in U.S., the proposed changes could result in an increase in cross-border capital flows, which comprised slightly less than 10%, or $26.9 billion, of total U.S. commercial real estate transaction volume in 2012. The reason is that foreign pension funds would be more willing to invest in U.S. real estate assets knowing they could immediately realize all proceeds from the sale of a real estate asset.