Treasury Issues Final Regulations Clarifying Definition of REIT Real Property

The Treasury Department issued final regulations that clarify the definition of real property for purposes of the REIT provisions of the Internal Revenue Code.

These final regulations provide guidance to REITs and their shareholders. While the final regulations are effective for taxable years beginning after Aug. 31, 2016, Treasury and the Internal Revenue Service will allow taxpayers to rely on the regulations for periods beginning on or before that date.

The final regulations generally define real property to include:

  •  land;
  •  inherently permanent structures that serve a passive function; and
  •  structural components.

The final regulations take into account comments submitted by NAREIT on Aug. 12, 2014.

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

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