Investor Presentaiton
Instructions for Forms REIT-1, REIT-2, and REIT-3
Virginia Real Estate Investment Trust Registration and Certification Forms
Use these instructions to complete Form REIT-1, Virginia Real Estate Investment Trust Registration Application; Form
REIT-2, Virginia Real Estate Investment Trust Confirmation Application; and Form REIT-3, Virginia Real Estate Investment
Trust Investor Information Report.
Forms REIT-1, REIT-2, and REIT-3 must be submitted before investors may claim a subtraction on their Virginia income tax return.
General Information
For taxable years beginning on and after January 1, 2019,
taxpayers may claim an individual and corporate income
tax subtraction for income attributable to an investment in a
Virginia real estate investment trust (REIT) made on or after
January 1, 2019, but before December 31, 2024. In order
for the subtraction to be claimed on an investor's income
tax return, the REIT must be certified by the Department of
Taxation as a Virginia real estate investment trust fund for
the year of the investment.
To qualify as a Virginia REIT, the trust must:
(i) qualify as a REIT as defined in Internal Revenue Code
§ 856; and
(ii) invest at least 90% of trust funds in Virginia; and
(iii) invest at least 40% of trust funds in real estate in
localities that are distressed or double distressed.
Investments do not qualify for the subtraction if:
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The investment is made in a trust that is managed by a
family member or an affiliate of the taxpayer;
Identifying Localities and FIPS Codes
To determine the locality in which the property is located,
use the FIPS (Federal Information Processing Standards)
code lookup tool on the Department of Taxation's website
at www.tax.virginia.gov/fips. A list of qualifying distressed
and double distressed localities is available on the
Virginia Economic Development Partnership website at
www.vedp.org.
How to Register and Certify the Fund
Registration and certification of the Virginia REIT is a 3-step
process.
STEP 1 - Submit Form REIT-1
Use Form REIT-1, Virginia Real Estate Investment Trust
Registration Application, to register the trust. To be registered,
the trust must indicate that it intends to invest at least 90% of
trust funds in Virginia and at least 40% of trust funds in real
estate in distressed or double distressed localities.
The taxpayer claimed the subtraction for certain long- STEP 2 - Submit Form REIT-2
term capital gains for the same investment;
The taxpayer claimed the subtraction for investments
in a Virginia venture capital account for the same
investment; or
The taxpayer claimed the Qualified Equity and
Subordinated Debt Investments Tax Credit for the
same investment (applies to individual taxpayers
only).
If the Department determines that the REIT meets the
qualifications, the Department will certify the trust as a
Virginia REIT when the trust actually invests at least 90%
of trust funds in Virginia and 40% of the trust funds in real
estate in localities that are distressed or double distressed.
A locality is considered distressed if it meets either of the
following criteria:
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The locality has an annual unemployment rate for
the most recent calendar year for which such data
is available that is greater than the final statewide
average unemployment rate for that calendar year; or
The locality has a poverty rate for the most recent
calendar year for which such data is available that
exceeds the statewide average poverty rate for that
year.
A locality is considered double distressed if it meets both
of the criteria above.
Va. Dept. of Taxation 1501244 Rev. 12/21
After the investment has been made, use Form REIT-2,
Virginia Real Estate Investment Trust Confirmation
Application, to apply for certification as a Virginia REIT. You
must include documentation to demonstrate at least 90% of
trust funds were invested in Virginia and at least 40% of the
trust funds were invested in real estate in localities that are
distressed or double distressed. Documentation includes,
but is not limited to account statements, receipts, and any
other documents to support the investment.
STEP 3 Submit Form REIT-3
Use Form REIT-3, Virginia Real Estate Investment Trust
Investor Information Report, to provide investor information
to the Department. This information must be received before
the investor is able to claim the subtraction on his/her income
tax return.
Annual Certification Process
Certification as a Virginia REIT is valid only for the year in
which it was issued. The trustee must complete steps 1-3
for each year it desires certification as a Virginia REIT. If
the trust is not certified by the Department for the taxable
year during which an investment is made, income from the
investment will not qualify for the subtraction.View entire presentation