Tech firms compete for REIT status — in an effort to save millions in taxes
Technology firms are increasingly looking to convince the government that they are, in fact, in the real estate business, according to the Wall Street Journal. If a firm can ditch its corporate tax status and become a non-taxed real estate investment trust, it stands to save millions in taxes.
American Tower, a cellphone tower operating firm, could save as much as $400 million per year by 2017, according to analysts, due to its new REIT tax status. Another tech firm, Equinix, and Iron Mountain, a data storage company, are both expected to save some $150 million a year in taxes as REITs.However, some actual real estate executives worry that the tax dodge could cause a backlash in Washington, at a time when REIT profits are strong. The total market value of REITs rose to $451 billion in 2011 — up from just $9 billion in 1990, according to National Association of Real Estate Investment Trusts data cited by the Journal.
“The real-estate companies correctly are nervous about this phenomenon,” Kenneth Rosen, a real-estate economics consultant and former hedge fund manager, said. “The more it looks like a tax loophole, the more likely it is to affect them negatively.” [WSJ] – Christopher Cameron