Tax issues for real estate fund sponsors / investors

Key tax priorities for funds and investors

We can provide you with...

Investors in fund

• Tax due diligence to determine whether the proposed investment structure is tax efficient for the investor and to reveal any material tax consequences and risks;
• Advice on the tax efficient structuring of the investment in the fund; and
• Review of the fund documentation to ensure that the tax position taken by the fund and fund manager is sustainable and not unduly aggressive.

Launching a fund

• Advice on the tax efficient structuring of the fund, taking into consideration the locality and nature of the investments, the profile of the prospective investors, and your commercial requirements;
• Advice on the tax efficient structuring of the fund management and investment advisory functions, including tax planning for remuneration and carries for the fund managers and senior executives;
• Advice on the relevant tax sections of the private placement memorandum;
• Review of the fund documentation to ensure the tax position of the fund and fund manager is maintained; and
• Review of financial models of the fund.

Acquisition of real estate

• Financial and tax due diligence on the target, particularly in the case of a share deal;
• Advice on the structuring of the acquisition in a tax efficient manner;
• Advice on transaction taxes, e.g., stamp duty, registration tax, etc.;
• Advice on funding structures, including the use of structured finance products, deductibility of funding costs, etc.; and
• Depreciation review to optimise the allowances and provide robust documentation to support the claim in the case of an asset deal.

Holding period

• Annual tax compliance services for the fund, fund manager, investment advisor and investee companies;
• Pro-active tax advice on the latest developments in tax law and practice;
• Monitoring of substance requirements;
• Advice on permanent establishment issues;
• Assistance in tax audit and dispute resolution;
• Advice on transfer pricing and related documentation issues; and
• Advice on tax provisioning and related documentation issues.

Exit of investment

• Advice on the various exit strategies available, including IPO, REIT listing, asset sale, share sale etc, and the applicable tax implications, including income tax and transaction taxes; and
• For IPO and REIT listing, restructuring advice prior to listing and advice on tax considerations including income tax and transaction taxes, reviewing tax exposures of the companies involved and mitigating exposures prior to exit, including seeking tax rulings where appropriate.

International tax issues

• A fund operation would typically need to deal with tax issues in different jurisdictions.  Within PwC, we have a close network of real estate tax specialists around the globe.  Leveraging on the global network, we adopt a centralised and coordinated approach to provide an integral resource and one-stop service for our clients.