Details of Public Law 119-21, section 70439 , One Big Beautiful Bill Act

This provision would increase the percentage of a real estate investment trust’s (REIT) total assets that may be represented by securities of one or more taxable REIT subsidiaries from 20 percent to 25 percent.

California generally conforms to federal REIT rules as of the specified date of January 1, 2025, with modifications. However, California law provides that a corporation, trust, or association that is a REIT for any taxable year for federal purposes is automatically a REIT for California purposes for the same taxable year. Conversely, a corporation, trust, or association that is a not a REIT for any taxable year for federal purposes is automatically not a REIT for California purposes for the same taxable year.

Although California does not conform to the change made by this act, under California law, for any taxable year that a trust qualifies for REIT status for federal purposes is determinative for California purposes. Thus, any trust that qualifies as a REIT for federal purposes will automatically qualify as a REIT for California purposes.

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