In my recent articles on Manulife and Keppel KBS, I highlighted a potential tax complication that could have an adverse impact on both REIT’s dividend yield.
Both REITs own office properties in United States and have set up certain corporate structure to optimize the taxes that they have to pay.
However, in Dec 2017, there was a big change in the United States tax code. The Tax Cuts and Jobs Act (TCJA), was one of the biggest change to the tax code since 1986.
There were a few sections in the new Tax Cuts and Jobs Act (TCJA) that affect Manulife and Keppel KBS. (You can read more about the layman explanation in detail in my article here)
To address section 163(J), both REITs restructured their United States property ownership structure to be flat, thus eliminating the impact of interest deduction limit.
To address section 267A on …