The House of Representatives passed a $622 billion tax package that extends many tax provisions set to expire, including some affecting real estate investment trusts.
One provision, expected to generate $1.9 billion in new tax revenue, allows for tax-free real estate spinoffs only if the distributing and controlling corporation are REITs; another limits to 20% a REIT’s ownership of taxable REIT subsidiaries. The bill also addresses REIT investors, with a new tax exemption for foreign pension plans and a higher tax exemption on the sale of holdings for shareholders of publicly traded REITs owning 10% or less.
The bill also incorporates the Church Plan Clarification Act of 2015 approved Dec. 10 by the Senate, which corrects legal and regulatory issues for church pension plans but does not affect the definition of a church plan for tax or ERISA purposes.
Another provision allows taxpayers to roll over amounts from an employer-sponsored retirement plan to a SIMPLE IRA, provided the plan has existed for at least two years.
Some extensions were made permanent while others only add a year or more. The Senate will vote on the tax package Friday, and the White House supports it.
House Speaker Paul Ryan, R-Wis., said in a statement after House passage of H.R. 2029, the Protecting Americans from Tax Hikes (PATH) Act, that it was “a pivotal step towards rewriting our broken tax code by ending Washington's days of extending tax policies one year at a time.”
Mr. Ryan said that comprehensive tax reform will be a central part of the Republican agenda in 2016.
Ways and Means Committee Ranking Member Sander Levin, D-Mich., who voted against the tax extenders bill, said it will add $622 billion to the deficit at the expense of the middle class. “For those who want — as they have for years — to make tax breaks permanent so that they will not have to be offset in a revenue-neutral tax reform, this bill will help them carry this out, leaving more room to cut taxes for the very wealthy.”