Jonathan Saltzman, director at PwC U.S. Tax LLP, sat down for a video interview during Nareit’s REITwise: 2025 Law, Accounting & Finance Conference in San Antonio on March 25-27.
Saltzman offered insights into state and local tax considerations for REITs, particularly when forming entities and navigating distressed assets. He emphasized the value of being deliberate in entity selection early on, noting that different states have varied tax rules that can influence savings.
"In California, QRS entities and LPs are not subject to the LLC fee...a savings of about $13,000," Saltzman explained.
Similarly, in Texas, passive entity exemptions can benefit LPs over LLCs under franchise tax rules. He also advised that planning for investor exits from day one can avoid costly restructuring later, especially in states like Pennsylvania, which impose broad transfer taxes with limited exemptions.
On distressed assets, Saltzman cautioned that foreclosures or deeds in lieu can trigger state tax obligations. While some states offer exemptions, the rules are often fact-specific.
“It’s kind of painful to then pay transfer tax just to take back an asset,” he remarked, highlighting the financial burden in already difficult situations.
When weighing entity versus asset sales, Saltzman urged a balanced view of tax savings and deal momentum.