H.R. 2198 would modify tax rules for Real Estate Investment Trusts (REITs) by increasing the asset threshold for their taxable subsidiaries from 20 percent to 25 percent of total assets. REITs are investment vehicles that own income-producing real estate and pass earnings to shareholders, while taxable REIT subsidiaries allow them to conduct certain non-real estate business activities. This change would give REITs more flexibility to invest in taxable subsidiaries without violating tax code requirements. The bill has no associated funding since it is a tax code amendment, and the change would take effect for tax years beginning after December 31, 2025. The legislation is supported by a bipartisan group of House members and has been referred to the Committee on Ways and Means.
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