H.R.2198 - To amend the Internal Revenue Code of 1986 to restore the taxable REIT subsidiary asset test. (119th Congress)
Summary
H.R.2198 aims to amend the Internal Revenue Code of 1986, specifically targeting the taxable REIT (Real Estate Investment Trust) subsidiary asset test. The bill proposes to change the allowable percentage from 20 percent'' to25 percent''. This adjustment affects the amount of assets a REIT can hold in a taxable REIT subsidiary.
Expected Effects
The primary effect of this bill would be to allow REITs to hold a larger portion of their assets in taxable subsidiaries. This could provide REITs with greater flexibility in their investment strategies and potentially increase their profitability. The change is slated to take effect for taxable years beginning after December 31, 2025.
Potential Benefits
- Increased flexibility for REITs in managing their assets.
- Potential for higher returns for REIT investors.
- Simplification of REIT compliance with tax regulations.
- May encourage further investment in real estate.
- Could lead to more diverse real estate projects.
Most Benefited Areas:
Potential Disadvantages
- Potential for increased tax avoidance by REITs.
- Possible shift of assets from standard corporate taxation to REIT taxation.
- Complexity in understanding the implications for smaller investors.
- May disproportionately benefit larger REITs.
- Risk of distorting real estate investment decisions.
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the US Constitution. The amendment to the Internal Revenue Code is a direct exercise of this constitutional authority. There are no apparent conflicts with other constitutional provisions.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).