Proposed IRS Regulations Address "Good" REIT Assets

Industry has been awaiting guidance from the Internal Revenue Service on the definition of property that will qualify as "good REIT assets" under the Internal Revenue Code. On May 14, 2014, the government published an important set of proposed regulations, meant to "clarify" current law, and which generally would be applied to existing assets as of the end of the quarter following publication of the regulations in final form. The proposed regulations do not address all currently pending private ruling requests (such as those relating to file storage facilities), but provide a foundation and approach addressing many questions that arise in this area.

The preamble to the proposed regulations notes that guidance had been published in the form of revenue rulings through 1975, and thereafter in the form of private rulings, which technically, can be relied upon only by their recipients. Thus the proposed regulations are meant to provide general guidance to all