Taxes Consolidation Act 1997 section 705IA

Disposals and reinvestments

Section 705IA sets out the rules governing the use of proceeds when a REIT or group REIT disposes of a property from its property rental business, including the consequences where those proceeds are not reinvested or distributed within specified timeframes.

• Net proceeds of a disposal are the full proceeds less any amount used to repay specified debt that was employed in acquiring, enhancing or developing the property disposed of.
• Proceeds must be reinvested in new or existing rental property, or distributed to shareholders, within a window commencing 12 months before the disposal and ending 24 months after the disposal (or the date of cessation of the REIT, if earlier).
• Any net proceeds not reinvested or distributed within the required timeframe are treated as property income of the REIT or group REIT, arising in the accounting period in which the deadline expires.
• The dividend withholding tax exemption for non-residents does not apply to distributions of disposal proceeds under this section.