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Real estate investment trusts: consultation

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The government is consulting on possible changes to the taxation of income received by REITs investing in other REITs and the role that the REIT regime can play in social housing.

‘It has been suggested by stakeholders that using the REIT regime to support the creation of a social housing REIT business model (e.g. a REIT whose property includes social housing) would offer social housing providers an alternative source of financing to fund their future housing developments,’ HM  Treasury said.

‘For REITs investing in REITs, it was proposed that amending the tax treatment of income from such activity would facilitate investment diversification opportunities for REIT investors.’

Finance Bill 2012 includes changes, announced at Budget 2011, to reduce ‘barriers to entry’ to the REIT regime, which moves the taxation of property income from the corporate level to investors. ‘Over 20’ REITs have been created, according to the Finance Bill Explanatory Notes, ‘with particular focus on commercial property investment’.

The Treasury and the Department for Communities and Local Government have invited comments by 27 June.