Final 337 regulations change REIT built-in gains period back to five years

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January 2017

Overview

The IRS has issued final regulations under Section 337 (the “Final 337 Regulations”) that reduce the built-in gains recognition period for REITs from ten years to five years on a permanent basis. The Final 337 Regulations follow the temporary Section 337 regulations issued in June 2016 (the “Temporary 337 Regulations”) which impact certain REIT conversion and other transactions between REITs and taxable C corporations.  The Final 337 Regulations will apply for transactions occurring on or after February 17, 2017 but taxpayers can choose to apply the five-year recognition period for transactions occurring on or after August 6, 2016.

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Paul Ryan

Real Estate Tax Leader, PwC US

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