REIT Tax News - July 2024

Welcome to the July 2024 issue of REIT Tax News. Below, we take a concise look at five developments to read about in less than five minutes and other recent updates.

1. Final domestically controlled REIT regulations

On April 24, 2024, the Treasury Department released the final “domestically controlled” REIT regulations. Key changes include (1) preserving the look-through approach included in the 2022 proposed regulations; (2) increasing the look-through threshold from 25 percent to 50 percent; and (3) granting certain existing REIT structures a ten-year exemption from the look-through rules, provided that such REITs do not undergo significant changes in shareholder ownership nor acquire a significant amount of new US real estate. See our client alert. 

2. Final transferable energy credit regulations

On April 25, 2024, the Treasury Department released final regulations clarifying, in part, that (1) eligible green energy tax credits held by a REIT that have not yet been transferred are disregarded for purposes of the REIT asset tests, (2) the transfer of an eligible credit is not considered a sale of property for the REIT prohibited transaction safe harbor, and (3) neither the receipt nor the right to receive an eligible credit constitutes income for a REIT. See our client alert. 

3. PLR on EV charging stations 

The IRS held in a recent private letter ruling (PLR) that making EV charging stations available to tenants at no additional charge is not a service and is therefore not an impermissible tenant service. See PLR 202413004.

4. PLR on independent retirement living communities as healthcare facilities. 

The IRS held in a recent PLR that an independent retirement living community is not a healthcare facility for purposes of the REIT tax rules and that a regulated community registered with the state is a healthcare facility for purposes of the REIT tax rules. See PLR 202415001.   

5. Supreme Court overturns Chevron – but Senate introduces Stop Corporate Capture Act.

On June 28, 2024, the Supreme Court overturned Chevron in Loper Bright Enterprises v. Raimondo, which could have a significant impact on the IRS and its interpretation of the Internal Revenue Code. On July 23, 2024, a group of Senate Democrats introduced the Stop Corporate Capture Act to reverse the Loper Bright ruling and codify the Chevron doctrine. See our client alert and illustrative framework.

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