IRS rules for first time that REIT’s income from markup on electricity from EV charging stations is rents from real property

February 1, 2026 - 12:48

In a landmark decision, the Internal Revenue Service has ruled for the first time that a Real Estate Investment Trust's income from the sale of electricity at on-site electric vehicle charging stations qualifies as rents from real property. This pivotal determination means such revenue can be applied toward the REIT's mandatory gross-income tests under Section 856 of the tax code.

The ruling addresses a modern income stream not explicitly covered in existing statutes. It signifies that the markup a REIT charges for electricity provided through its installed charging infrastructure is treated as ancillary to the rental of the underlying real property. This interpretation provides crucial clarity for REITs owning and operating properties like shopping centers, apartments, and office buildings as they adapt to the growing demand for EV infrastructure.

By classifying this income as qualifying rent, the IRS removes a significant potential barrier. REITs must derive at least 75% of their gross income from real estate-related sources, including rents. This decision allows them to invest in and profit from EV charging stations without jeopardizing their essential tax-advantaged status. The move is expected to accelerate the deployment of charging facilities at properties nationwide, supporting broader EV adoption while offering REITs a new, compliant revenue model aligned with their core real estate holdings.