February 6, 2008
REITs pan bill that would tax them
Real estate investment trusts yesterday had a chance to criticize a proposed bill in front of the Legislature's taxation committee that would tax REITs on the corporate level in Maine.
The bill, proposed by Rep. Robert Duchesne (D-Hudson), would tax REITs on the corporate level on capital gains, primarily the sale of land or property. REITs benefit from special tax status that allows them to escape the bulk of corporate income tax by agreeing to distribute at least 90% of their taxable income in the form of dividends, which is then taxed as income in the hands of shareholders.
Twenty-one REITs currently operate in Maine, according to the National Association of Real Estate Investment Trusts, but the bill is primarily focused on timberland REITs, which Duchesne says are able to make millions from developing Maine timberland while the state watches the revenue leave the state without being taxed. Plum Creek Timber Co., the only timberland REIT currently operating in Maine, says Duchesne's concerns are unfounded since the company has taxable subsidiaries that handle its real estate development.
The taxation committee is scheduled to discuss the bill Feb. 14, according to the Portland Press Herald.
The bill, proposed by Rep. Robert Duchesne (D-Hudson), would tax REITs on the corporate level on capital gains, primarily the sale of land or property. REITs benefit from special tax status that allows them to escape the bulk of corporate income tax by agreeing to distribute at least 90% of their taxable income in the form of dividends, which is then taxed as income in the hands of shareholders.
Twenty-one REITs currently operate in Maine, according to the National Association of Real Estate Investment Trusts, but the bill is primarily focused on timberland REITs, which Duchesne says are able to make millions from developing Maine timberland while the state watches the revenue leave the state without being taxed. Plum Creek Timber Co., the only timberland REIT currently operating in Maine, says Duchesne's concerns are unfounded since the company has taxable subsidiaries that handle its real estate development.
The taxation committee is scheduled to discuss the bill Feb. 14, according to the Portland Press Herald.
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