Monday, September 01, 2008 Solon seeks to address land ownership issues
TO MINIMIZE the presence of “fly-by-night” companies and promote corporate social responsibility in the real estate industry, a congressman filed a bill that will encourage “pass-through” entities in various property development ventures.
Rep. Ramon “Red” Durano VI (Cebu 5th district) said the Real Estate Investment Thrust (REIT) bill will also answer President Arroyo’s call for a legislation that will look at the current concerns of foreign investors in relation to the constitutional provision that prohibit full foreign ownership of real estate in the country.
The bill is the Lower House’s version of a proposal filed by Sen. Pia Cayetano in the Senate, Durano said.
“One of the subjects that will be taken up by this bill is long-term leasing,” Durano told members of the Cebu press in a
recent press conference.
Under the REIT bill, small-time investors are given an opportunity to invest in safe and profitable money-making ventures.
Tax perk
He said that the REIT to work, the bill provides for a fiscal incentive.
A corporation that will register under the REIT can only be taxed once.
“The tax should be limited at the corporate level and no tax can be imposed on the distribution of income,” Durano explained.
If passed into law, the bill will also encourage more real estate investments since developers will have the option to sell a developed property to management companies, also known as “pass-through” entities, said Durano.
But REIT-registered companies cannot develop real estate projects as they are only allowed to buy and manage developed properties.
Durano said this set-up will be advantageous to real estate developers since they can sell their projects and get their capitalization back so the money can be invested in another property.
“This (system) is evident in Hong Kong, Australia and Japan and investors in these countries get high returns for their money,” Durano said.
If approved, Durano said the REIT will also pave the way for a new industry that will be composed of real estate management companies.
Durano said the proposal will also give investors more options to invest in the country. (DME)
