Congress Moves to End Tax-free Spin-offs
This week, the US House of Representatives approved legislation that would remove the tax benefits of spinning off corporate real estate into separate, publicly traded real estate investment trusts (REITs). Ending such spin-offs is expected to generate $1.9 billion in additional tax revenue according to the Joint Committee on Taxation estimate.
There have been 15 tax-free REIT spin-offs since 2010, including five in 2014 and three this year, for a total of $21.6 billion, according to The New York Times (citing data from FactSet).
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The legislation, which is expected to pass in the Senate, also contains permanent tax incentives for individuals and companies. It exempts shareholders of publicly traded REITs from paying taxes on the sale of the holdings if they own 10 percent or less of the stock (up from the current threshold of five percent) and it creates new exceptions to taxes for foreign pension plans, according to the NYT report.
Last Updated on December 17, 2015 by Ramin Seddiq