On March 29, 2024, the IRS released Private Letter Ruling 202413004, providing its first piece of guidance regarding whether a REIT may receive income from electric vehicle (EV) charging stations at its rental properties without detrimentally impacting its REIT status.
With the proliferation of EV users across the U.S. and particularly within the real estate industry, such as at outdoor facilities where EV users are looking to recharge, this ruling has been highly anticipated and provides much needed guidance for REIT taxpayers.
Below details how the REIT seeking the ruling from the IRS intends to use its EV charging stations. Specifically, the REIT:
Based on the facts above, the IRS ruled income the REIT receives for use of EV charging stations by its tenants and their guests should not create “impermissible tenant service income” within the structure of a REIT. Therefore, any EV charging station income a REIT receives will qualify as rents from real property for purposes of the REIT gross income tests, safeguarding a taxpayer’s REIT status.
With the uptick in federal, state and local incentives, e.g., rebates, grants, credits, etc., as well as the market share of EV users trending upward, this ruling will not only help REIT property owners maintain their status, but also potentially gain inroads to achieve and maintain “green status.” Green properties generally have higher occupancy rates, increased rents, better tenant retention and drive asset values upward, so this ruling can have a great impact on the industry moving forward.
Contact Dave Sobochan or a member of your service team to discuss this topic further.
Cohen & Co is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.