PATH Act: Major Changes to the REIT and FIRPTA Rules

03/08/2016 01:00 p.m. - 02:00 p.m. EDT

Capital Markets, Federal Tax, Mergers + Acquisitions, Private Equity Funds, Private Equity Investments + Buyouts, and REITs

Michelle M. Jewett and Shane M. Shelley


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Trevor Starer
(212) 336-4310

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The 2015 holiday season saw one of the biggest tax bills to come along in some time.  Among other things, the “Protecting Americans from Tax Hikes,” or PATH Act, made significant revisions to the REIT rules and the Foreign Investment in Real Property Tax Act (“FIRPTA”), which will make investment in U.S. real estate more attractive (taxwise, at least), particularly for foreign pension funds and publicly traded foreign funds in certain jurisdictions, and particularly through U.S real estate investment trusts (“REITs”).  Join us for a one hour briefing on these developments.

Topics for discussion include:

  • Prohibition on tax-free REIT spinoffs by non-REIT entities;
  • Exemption from FIRPTA for foreign pension plans and certain publicly traded companies investing in U.S. real estate;
  • Expansion of exemption for investors in publicly traded REITs;
  • Favorable technical changes, including the elimination of the “preferential dividend” rules for public REITs, the introduction of a new “prohibited transactions” safe harbor, a reduction in the recognition period for built-in gains on REIT conversions, the expanded use of REIT hedges and an expansion of the definition of qualifying “real estate assets”; and
  • Liberalization of the use of taxable REIT subsidiaries (“TRSs”) in some situations, but constriction of their use for REIT qualification purposes.


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