In May 2014, the Internal Revenue Service (IRS) released proposed regulations revising and clarifying the definition of real property for the purposes of the real estate investment trust (REIT) provisions of the Internal Revenue Code (Code).1 No published guidance has been issued addressing whether certain assets qualify as real property for purposes of the REIT provisions of the Code since 1975; instead, taxpayers have asked for and received letter rulings from the IRS addressing certain of these assets.
Because letter rulings are limited to their particular facts and may not be relied upon by taxpayers other than the taxpayer that received the ruling, letter rulings are not a substitute for published guidance. The proposed regulations, if finalized as proposed, will provide a framework to analyze whether assets in which REITs seek to invest qualify as real property for purposes of Sections 856 through 859 of the Code. The proposed regulations generally are consistent with previously issued letter rulings and published guidance, and specifically list assets that will qualify as real property.
