A Clinton Administration proposal could surface in Congress and abolish the use of real estate investment trusts to house mortgage investments and avoid some state taxes in what some consider a loophole. All states except Connecticut tax REIT dividends at a lower rate than they tax the interest that would accrue from the mortgages if they were not in the REIT.

The administration proposal would prohibit any entity from owning more than 50% of a REIT's stock and thus controlling a REIT subsidiary to avoid state taxes.

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