Policy Issues

Since its inception, NAREIT has diligently worked to preserve and perfect REITs by helping to shape the landmark legislation and policy decisions that have defined the evolution of REITs and real estate investment.

Speaking as the voice of the industry, NAREIT articulates its position at the highest levels of the U.S. and other governments, at state and local levels, and before numerous standards-setting organizations around the globe.

Ensuring that our members collective best interests are effectively protected and promoted remains our topmost priority.

NAREIT's policy priorities include:

Tax Reform
Congress continues to eye tax reform as a priority issue. And while it’s very difficult to enact comprehensive tax reform, advocates are maintaining a steady drumbeat in favor of broad reform. Their argument: tax reform is essential to restoring US competitiveness abroad, encouraging economic growth at home, and making for a fairer, simpler tax system. 
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Foreign Investment in Real Property Tax Act (FIRPTA)
The Foreign Investment in Real Property Tax Act (FIRPTA) was enacted by Congress in 1980 as a means to tax the gains on non-US citizens’ income from the sale of US real property. FIRPTA acts as a significant impediment to foreign investment in US infrastructure and real estate at a time when the country’s infrastructure needs are greater than ever. As a practical matter, FIRPTA limits the amount that foreign investors are willing and able to invest in US REITs. Congress enacted significant FIRPTA reforms in December 2015 that NAREIT strongly supported but there is more that should be achieved in this area both legislatively and on a regulatory basis.
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Like-Kind Exchanges
The like-kind exchange rules recognize that the exchange of one property held for investment or business use for a similar property does not change the economic status of the taxpayer and therefore should not be taxed. As they apply to real estate, like-kind exchange rules have led to a more dynamic real estate sector – one that encourages reinvestment and construction activity and allows real estate owners to better allocate resources. The rules also lead to lower levels of debt in commercial and multifamily real estate transactions. Over the last few years, there have been several legislative and regulatory proposals to eliminate or restrict like kind exchange deferrals.
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Marketplace Fairness
Marketplace Fairness would level the sales tax playing field by ensuring that sales taxes are applied equally – whether the sale occurs at a physical location or online. It would ensure that main street businesses are not unfairly burdened with a government-sanctioned price disadvantage over their online competitors. 
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Hawaii
A proposal was raised in the Hawaii state legislature in 2015, 2016 and 2017 to eliminate the dividends paid deduction (DPD) for all real estate investment trusts in the state. NAREIT opposed the proposal. Eliminating the DPD would be contrary to the federal income tax rules applying to widely held REITs in every state but one with an income-based tax system like Hawaii. Based on filings with the Securities and Exchange Commission and other data sources, more than 20 widely held REITs have invested about $13 billion in commercial real estate in Hawaii, resulting in the employment of many Hawaii residents.
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Housing Finance Reform
In the wake of the 2008 financial crisis, the US government seized control of mortgage giants Fannie Mae and Freddie Mac. As a result, the federal government now backs 70 percent of all new residential mortgages, according to the nonpartisan Congressional Budget Office. Policymakers have been struggling for years to determine a legislative solution to reduce the federal government’s newly-expanded role in the US housing market. REITs have been one of the few bright spots in supplying private capital into housing finance.
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OECD
The Organization for Economic Cooperation and Development (OECD) is an organization of industrialized countries responsible for creating a model tax treaty known as the Model Tax Convention. Since 2006, NAREIT and its foreign partners in the Real Estate Equity Securitization Alliance (REESA) have worked collaboratively with the OECD on REIT-related provisions in the treaty. 
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NAREIT FFO
As the market for real estate investment trusts continues to grow, it is critical that individuals have access to accurate and impartial data to make informed investment decisions. One important non-GAAP measure is NAREIT Funds from Operations (FFO), which is used by REITs to as a supplemental measure of operating performance. NAREIT FFO is generally calculated by adding depreciation and amortization related to real estate to GAAP net income and subtracting gains and losses from real estate sales. FFO is not intended to be used as a measure of the cash generated by a REIT nor of its dividend paying capacity. NAREIT believes that statements of cash flows provided for by GAAP financial statements are adequate for analysts to assess the cash generated and used by REITs. NAREIT is committed to increasing the use of NAREIT-defined FFO and improving the understandability and uniformity of FFO estimates. In recent years, NAREIT has urged member companies that provide FFO guidance related to a company-defined version of FFO to provide guidance on NAREIT-defined FFO as well.
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Investment Company Act of 1940
The Investment Company Act of 1940 is a pillar of US financial law which regulates open-end mutual funds, unit investment trusts and closed-end funds. However, the law lays out in plain language a broad exclusion through which many publicly-traded REITs are exempt from regulation as an “investment company.” In 2011, the Securities and Exchange Commission, which is tasked with enforcing and regulating the act, issued a concept release soliciting comments regarding mortgage companies exclusion from registration as investment companies.
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Basel III
In an effort to prevent future runs on banks, a number of nations including all G-20 countries agreed to the Basel III regulatory framework in 2010, which strengthens bank capital requirements by increasing bank liquidity and decreasing bank leverage.
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