07/20/2020 | by

In a letter submitted to the Treasury Department and IRS on July 20 concerning its 2020-21 Priority Guidance Plan (PGP), Nareit requested the Treasury Department and IRS to issue guidance on three specific issues.

As requested many times and most recently last in a June 7, 2019 letter, Nareit requested that the IRS withdraw Notice 2007-55, which applies the rules set out by the Foreign Investment in Real Property Tax Act (FIRPTA) to REIT redemptions and liquidations because the Notice unnecessarily impedes non-U.S. investment in U.S. real estate.

Nareit also asked that the Treasury Department and IRS exercise their regulatory authority to prevent otherwise qualifying rent payments from becoming nonqualifying income under the “related party” rent rules, solely due to the application of legacy constructive ownership rules.

Lastly, Nareit reiterated a recommendation it has made in June 7, 2019 and June 14, 2018 letters that the Treasury and IRS issue guidance to exempt transfers by a foreign corporation of appreciated assets to a REIT from the “built-in gains” rules if the foreign corporation is not otherwise subject to U.S. tax. This guidance item appears to be included in the current Third Quarter Update of the 2019-20 PGP.

(Contact: Dara Bernstein at dbernstein@nareit.com)

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