Proposed Regulations May Affect Taxation of Foreign Investors in REITs

Shawn P. Wolf

The IRS recently issued Proposed Regulations that, among other things, affects when Real Estate Investment Trusts (“REITs”) are treated as a “domestically controlled investment entity.” The IRS seeks to apply a “look-through” approach until reaching a “non-look-through person” [e.g., individuals, certain domestic C-corporations, foreign corporations, publicly traded REITs, publicly traded partnerships, an estate, and certain other entities]. 

We cannot predict whether the Proposed Regulations will be finalized; nevertheless, foreign investors and real estate fund sponsors should review their investment structures, organizational documents, side letters, and contractual undertakings to determine whether they are affected by these Proposed Regulations and whether any actions are required.

A more detailed discussion can be found here.

Article by Daniel Martinez, David S. Resnick & Shawn P. Wolf.

XLNC TFG Newsflash| April 2023

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