Sponsors (2)
The bill gives REITs greater flexibility to run and expand non‑core businesses via TRSs—potentially boosting competitiveness and simplifying tax planning—while increasing investor exposure to business risk and posing a modest risk of reduced corporate tax revenue.
REITs (and their investors and business partners) can hold a larger share of assets (raised from 20% to 25%) inside taxable REIT subsidiaries (TRSs), giving REITs more flexibility to operate non‑qualified businesses and structure investments.
REITs may become more competitive and able to pursue higher‑return or value‑add real estate activities through TRSs without jeopardizing REIT status, potentially enhancing returns for investors and supporting real estate activity.
Eases tax‑planning pressure for REITs by reducing the need to divest assets or alter corporate structures to stay below the TRS cap, simplifying compliance and transactional decisions.
REIT investors could face greater exposure to operating or non‑core business risks if REITs allocate more assets to TRSs that engage in riskier activities.
Raising the TRS cap may reduce corporate tax revenue or create additional tax‑planning opportunities that lower collections, imposing a potential fiscal cost on other taxpayers.
Based on analysis of 2 sections of legislative text.
Increases the cap on REIT assets held in taxable REIT subsidiaries from 20% to 25%, effective for tax years beginning after Dec 31, 2025.
Official title: Amend the Internal Revenue Code of 1986 to increase the percentage limitation on assets of real estate investment trusts which may be held in taxable REIT subsidiaries.
Introduced April 8, 2025 by Thomas Roland Tillis · Last progress April 8, 2025
Raises the share of a real estate investment trust's (REIT's) assets that may be held in taxable REIT subsidiaries (TRSs) from 20% to 25%, giving REITs greater flexibility to hold taxable activities inside TRSs. The change applies to taxable years beginning after December 31, 2025 (effectively for tax year 2026 and later).