Xiuke Hung, Partner and Co-Chair of the National Real Estate Tax Practice DLA PiperParticipated in a video interview during Neret’s REITWISE: 2024 Law, Accounting & Finance Conference held March 19-21 in Hollywood, Florida.
Hung discusses important insights into the complexities of real estate taxation, highlighting the surprising challenges faced by experienced real estate operators. He stressed the need for adaptation, explaining how traditional lease agreements may not align with REIT rules.
He also delved into the area of hedging within REITs, explaining its importance and the regulatory framework surrounding it. He clarified the balancing act required between financial instruments and real estate income, noting the permissibility of certain hedging strategies under tax rules.
“Hedges are kind of a complicated thing,” he said. ,[It’s] some kind of financial instrument [and] is actually derivative, so it does not look or feel like a real property rental – in fact, it is not a real property rental.”
Regarding compliance, Hung underlined the importance of promptly correcting unintentional errors. He recommends proactive measures, urging REITs to establish strong operating guidelines and global hedging policies to mitigate future anomalies.
