2025 US Tax Reform: What Non-US Investors in US REITs Need to Know

This article evaluates the 2025 US tax reform and its impact on investments in US real estate investment trusts (REITs) for non-US investors. It explains the structural reasons that REITs have traditionally been a tax preferred investment vehicle for non-US investors and whether those same advantages continue to hold true post-2025 US tax reform. In particular, it considers the near-enactment of the so-called “retaliatory tax” levied on non-US persons under proposed section 899, which would have overridden tax benefits under income tax treaties and tax benefits enjoyed by non-US governments including sovereign wealth funds and pension funds under domestic US tax law. The article ends with offering some practical lessons from the 2025 tax reform including how non-US investors should evaluate change-in-law risk in their investments going forward.