Proposal to rescind REIT tax break draws questions over scope and renters’ costs; roll to next week
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Summary
Representative Leatherwood’s bill to remove a tax break for REITs drew committee concern that it might change residential assessments and raise rents; supporters said it levels the playing field, but the chair rolled the measure for further consideration.
Representative Leatherwood told the Commerce Committee he introduced a bill to remove a preferential tax break for real estate investment trusts (REITs) that he said gives REITs an unfair advantage over individual and other business owners of rental property. "What this bill would do is remove those tax breaks and advantages that the REITs specifically get," Leatherwood said.
Members raised concerns about the bill’s scope and unintended consequences. The chair noted the bill could expand to cover multifamily and commercial buildings owned by REITs and potentially change assessment methodology by applying a commercial assessment to residential property. "Whatever tax we pass on to a landlord will eventually be paid on by the tenant," the chair warned, citing a fiscal note estimate in discussion that the measure could raise $75 million in recurring revenue for the state while also potentially driving costs to renters.
Leatherwood said the bill is intended to level the playing field for businesses that do not receive REIT tax advantages; other members asked for time to consult tax and valuation experts. The chair moved to adjourn and take up the remainder of the calendar next week, effectively pausing action on the REIT proposal.