March 9, 2005

Legislation will Provide Flexibility for Property Owners and Create Jobs

Washington, DC – Senator Gordon Smith (R-OR) has introduced the Real Estate Mortgage Investment Conduit (REMIC) Modernization Act of 2004. This bipartisan legislation would improve the flexibility of real estate property owners to upgrade property by streamlining the bureaucratic and costly process.

“Communities lose out on jobs when property owners can’t make improvements,” said Smith. “By making simple and necessary adjustments to the tax code, we can free the hands of owners to make lasting investments that will improve the economy and create well-paid construction jobs.”

A REMIC is a fixed pool of qualified mortgages and other permitted investments that is not subject to taxation as its income is passed-through to its interest holders. A qualified mortgage includes obligations that are principally secured by an interest in real property and are transferred to the REMIC on the startup day or are purchased by the REMIC. Currently, certain transactions, including modifications of existing property are subject to a 100-percent tax. This has the effect of limiting the ability of real estate owners to make improvements on individual parts of their property.

The REMIC Modernization Act would simply update the tax code, which has remained unchanged for twenty years, allowing property owners to make needed improvements and upgrades without incurring heavy tax penalties.

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