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Real Estate Investments Trusts

Source: www.mazars.co.uk
Topic: Property Investment

Sort Desciption: contribution to the property investment market. In Europe REITs are at various stages of introduction. and development. Real Estate. Investments Trusts ...

Content Inside: REITs have been a feature of the property scene in the USA and Australia for many years making a substantial contribution to the property investment market. In Europe REITs are at various stages of introduction and development. Real Estate Investments Trusts The introduction of REITs in the UK Following concerted pressure from the property sector and in the wake of the Barker Report on Housing Supply, the Government in its December 2005 Pre-Budget Report announced that it had agreed to introduce Real Estate Investment Trusts REITs and has subsequently issued draft legislation. The legislation will be finalised in the 2006 Finance Act. REITs have been a feature of the property scene in the USA and Australia for many years making a substantial contribution to the property investment market. In Europe REITs are at various stages of introduction and development. The main principal behind a REIT is that its property rental income and gains are exempt from corporation tax. The aim is to replicate, for tax purposes, as if the property is owned by the individual. It is proposed that REITs will be introduced for companies that are carrying on a property rental business for accounting periods beginning on or after 1 January 2007. Criteria for a REIT To become a REIT a company must meet the following eight conditions: • The company must be UK resident and not a dual resident company; • The company’s shares must be listed on a Recognised Stock Exchange (not necessarily in the UK); • The company can only issue ordinary shares; no other classes of shares are allowed; • The company is not allowed to be an Open-Ended Investment Company; • The company must not be a close company, unless it is close by virtue of ownership of its shares by a venture capital limited partnership; • The company must not have convertible or non commercial loans; • No person can control 10% or more of the ordinary share capital (or voting rights); and • The company’s accounts ...

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