What is the Taxable REIT subsidiary asset test?
The taxable REIT subsidiary asset test limits how much of a REIT's assets can be represented by taxable REIT subsidiary stock. OBBBA Section 70439 raises the cap from 20% to 25% for tax years beginning after December 31, 2025, giving REITs more room for service-heavy operations such as hotels, healthcare facilities, and data centers. Investors using REIT exposure inside a Traditional 401k should understand how the higher cap may affect REIT business flexibility and income profiles.
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