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Topic: Non-Reporting Funds - does it apply to private REITs?  (Read 316 times)

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Non-Reporting Funds - does it apply to private REITs?
« on: January 05, 2018, 11:31:01 PM »
I tried to research this topic on the forum and online, but couldn't find a definitive answer. I understand that mutual funds are generally considered to be non-reporting funds unless they are registered with the HMRC and appear on their list. However, somewhere online I've read that REITs are not considered to be offshore mutual funds and, as such, may not be subject to this registration requirement.

The question is - if I own shares in a private REIT (i.e. through a platform such as Fundrise), would that considered to be a Non-Reporting Fund for the purposes of the UK taxation?

Thank you in advance for your help!


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Re: Non-Reporting Funds - does it apply to private REITs?
« Reply #1 on: January 07, 2018, 05:44:38 PM »
I assume that you are a UK resident US citizen.

On the above assumption, as regards mutual funds, as is well known, you would wish to invest in-
  - US domiciled funds, to meet US tax requirements,
  - which have UK reporting status, to avoid being charged to income tax on gains on sales.

For UK purposes, a REIT is an investment company, based in the UK whose shares are listed on the Stock Exchange.

Perhaps you are using the term REIT to mean something else?



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Re: Non-Reporting Funds - does it apply to private REITs?
« Reply #2 on: January 07, 2018, 06:34:59 PM »
- Yes, I'm looking at it from a UK resident - US citizen perspective.

- I'm using the term REIT from the US perspective - it's a RIC (regulated investment company) under the US securities laws. Most US REITs are traded on the stock exchange, but this one is privately offered. As such, I bought common shares of the US REIT directly from them. I'm not very familiar how UK definition of a REIT is different from the US, but I'd think it's fairly close.

Hope this clarification helps! Thank you for your help!


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Re: Non-Reporting Funds - does it apply to private REITs?
« Reply #3 on: January 07, 2018, 06:39:02 PM »
In the US a REIT is a Real Estate Investment Trust and many brokerages offer them.

https://www.investopedia.com/terms/r/reit.asp


“A real estate investment trust, or REIT, is a company that owns, operates or finances income-producing real estate. For a company to qualify as a REIT, it must meet certain regulatory guidelines. REITs often trades on major exchanges like other securities and provide investors with a liquid stake in real estate. ”
Dual USC/UKC living in the UK since May 2016


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Re: Non-Reporting Funds - does it apply to private REITs?
« Reply #4 on: January 08, 2018, 12:56:27 PM »
This is interesting. Thank you for the background on US REITs.

As regards the UK, this is obviously a non-UK fund. However, this does not automatically mean that they are within the scope of the OIG rules. There are of course detailed definitions of what is covered. There are therefore some types of funds not covered by the OIG rules. HMRC manuals have this comment in their manuals, in OFM03300.

“Arrangements that are not ‘mutual funds’
Any corporate or contractual entity not coming within the definition of a mutual fund at S356 TIOPA 2010 will not be an offshore fund. This would include, for example, foreign equivalents of UK investment trusts or UK Real Estate Investment Trusts (‘UK-REITs’) as those types of arrangements do not offer investors a facility to redeem their interests on request or at intervals, entirely or nearly entirely by reference to the net asset value (‘NAV’) of their proportionate share of the scheme property or an index, and nor are they limited life.”

The arrangements for the particular private US REITs may therefore take them outside of the scope of the OIG rules.



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