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Japan May Relax Tax Rules for Property Trusts After Market Shrinks by Half

Kathleen Chu and Katsuyo Kuwako Bloomberg News
Residential buildings in Tokyo. Japan will consider relaxing tax requirements as part of changes to rules for real estate investment trusts after the market shrank by more than half in the past three years, Mabuchi said. Photographer: Tomohiro Ohsumi/Bloomberg

Residential buildings in Tokyo. Japan will consider relaxing tax requirements as part of changes to rules for real estate investment trusts after the market shrank by more than half in the past three years, Mabuchi said. Photographer: Tomohiro Ohsumi/Bloomberg


Japan will consider relaxing tax requirements as part of changes to rules for real estate investment trusts after the market shrank by more than half in the past three years, a land minister said.



The government may revise the regulation to allow the trusts, known as J-REITs, to retain more than 10 percent of their earnings to finance operations, said Sumio Mabuchi, vice minister of the Ministry of Land, Infrastructure, Transport and Tourism. Currently, J-REITs must pay out more than 90 percent of their profit to investors as dividends to receive tax breaks.

“The REIT market has shrunk too much,” Mabuchi said in an interview in Tokyo. “We must consider ways for REITs to retain some of their earnings without losing tax breaks, because currently they are forced to keep seeking financing as they tend to pay out nearly all their earnings.”


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