Press & News

Job Law Provides Relief to REITS
04/11/2005

Under the American Jobs Creation Act of 2004, minor foot faults need no longer jeopardize tax status.

The American Jobs Creation Act of 2004 (Jobs Act), enacted on Oct. 22, 2004, amended certain rules relating to real estate investment trusts (REITs), which, among other things provided relief to REITs for minor foot faults that could jeopardize a REIT's tax status.

The following is a non-exhaustive discussion of some of the significant changes affecting REITs in the Jobs Act.

In general, a REIT may not own more than 10 percent by vote or value of any one issuer's securities (the "10 Percent Value Test").  Failure to satisfy the 10 Percent Value Test at the end of any quarter may result in a failure to qualify as a REIT.

Securities of an issuer that qualify for the "straight debt" safe harbor (as described below) are not subject to testing under the 10 Percent Value Test.

Download "Job Law Provides Relief to REITS," New York Law Journal - Trends in Real Estate and Title Insurance (April 11, 2005)