Income Tax Act 2007 section 809FZN

Real estate funds

Section 809FZN defines what constitutes a real estate fund and sets out special rules for how investments and disposals in land are timed when the fund holds a major interest in that land.

• A real estate fund is an investment scheme (not a venture capital, significant equity stake or controlling equity stake fund) where, at the outset, it is reasonable to expect that over its life more than 50% of total value will be invested in land and more than 50% will be held for at least 40 months
• Where a real estate fund holds a major interest in land, any subsequent investment in that land is treated as having been made at the time the major interest was first acquired, which affects the calculation of average holding periods
• Any disposal of an investment in the land is not recognised until a "relevant disposal" occurs — meaning the fund has disposed of more than 50% of the greatest amount it ever had invested in that land at any one time
• If the fund acquires a major interest in adjacent land, that acquisition is treated as an investment in the original land, and the adjacent land is thereafter regarded as part of the original land for the purposes of these timing rules