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Tax Coda

IRS excludes REIT hedge and offsetting hedge income from gross income tests

PLR 202601013. Released January 2, 2026.

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Tax Coda
Jan 08, 2026
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A mortgage REIT can exclude income from interest rate swaps, swaptions, and offsetting hedge positions from its 75% and 95% gross income tests when the hedges manage borrowing risk tied to real estate assets and are correctly identified.

Holding

The IRS issued a private letter ruling (PLR) that income from both primary interest rate hedges and offsetting …

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