Sponsors (2)
Introduced April 8, 2025 by Thomas Roland Tillis · Last progress April 8, 2025
The bill increases REIT flexibility and competitiveness by raising the TRS asset cap, but at the potential cost of reduced tax revenue and greater investor exposure to non‑core business risks.
REITs and their investors can hold a larger share of assets (raise TRS cap from 20% to 25%), giving REITs more flexibility to operate nonqualified businesses and pursue higher-return/value‑add real estate activities.
REITs and their managers will face less pressure to divest assets or restructure corporate arrangements to remain under the TRS cap, simplifying tax planning and compliance.
All taxpayers could face reduced corporate tax revenue if the higher TRS cap enables more income shifting or tax planning that lowers taxable corporate income.
REIT investors and shareholders may face greater exposure to operating and non‑core business risks if REITs allocate more assets to TRSs that engage in riskier activities.
Based on analysis of 2 sections of legislative text.
Increases the allowable percentage of a REIT's assets that can be held in taxable REIT subsidiaries from 20% to 25%.
Raises the share of a real estate investment trust's assets that may be held in taxable REIT subsidiaries (TRSs) from 20% to 25%. The change applies to taxable years beginning after December 31, 2025, giving REITs more room to hold assets that generate taxable income or support non‑qualifying activities inside a TRS structure.