Foreign Investment in Real Estate Tax Act of 1979

Foreign Investment in Real Estate Tax Act of 1979 - Amends the Internal Revenue Code to tax nonresident aliens and foreign corporations engaged in a trade or business in the United States on the same basis as U.S. citizens. Provides that gains or losses realized by such aliens or foreign corporations from the sale or exchange of a U.S. real property interest shall be afforded the same tax treatment as similar gains and losses of U.S. citizens.

Defines "U.S. real property interest" as either: (1) an interest in real property located in the United States; (2) stock in a U.S. real property holding organization (a business entity in which a controlling interest is held by ten or fewer individuals and of which U.S. real property interests constitute more than 50 percent of the fair market value of the organization); or (3) an interest in a partnership or trust which is or was a U.S. real property holding organization. Includes within the term "interest in real property" fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements, and options to acquire such leaseholds of land or improvements, but excludes an interest in real property which is used in a trade or business unless such property is used primarily for the production of rentals from real property, income from farming, or gain from the sale of a U.S. real property interest.

Requires individuals who acquire a U.S. real property interest from a nonresident alien or a foreign corporation to withhold an amount equal to 28 percent of the amount realized on the transaction. Provides an exemption from such withholding requirement if: (1) the seller of a property interest provides the buyer with a certificate which indicates that any tax liability with respect to the sale has been satisfied or does not exist; (2) the transaction involves the acquisition of stock in a corporation which is effected through the medium of an organized securities exchange; or (3) the transaction involves the sale of property used as a single family principal residence and the amount realized upon disposition does not exceed $150,000. Invalidates any exemption from the withholding requirement if the buyer is aware that the certificate of exemption is false or fraudulent.

Requires a U.S. real property holding organization in which a nonresident alien or a foreign corporation owns an equity interest to file an informational return for the taxable year in which such interest is held. Directs the Secretary of the Treasury to publish at least twice a year the names and addresses of organizations filing such returns. Provides civil penalties for organizations which fail to file such returns.

Designates U.S. real property interests as property situated in the United States for purposes of the estate and gift tax.

Allows nonresident aliens and foreign corporations a refundable income tax credit for tax withheld with respect to dispositions of U.S. real property interests and tax-free covenant bonds.

Overrides, for taxable years after December 31, 1984, tax treaties which would exempt foreign investors from the requirements established by this Act.

Permits the Internal Revenue Service to inspect the books and records of a taxpayer to insure compliance with the requirements of this Act without regard to any restrictions on IRS inspections otherwise imposed by law.