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705IFunds awaiting reinvestment.

(1) This section applies where—

(a) a REIT or group REIT disposes of a property of its property rental business, or

(b) a REIT or a principal company, in the case of a group REIT, raises cash from the issue of ordinary share capital,

and the REIT or group REIT, as the case may be, holds the proceeds.

(2) (a) Profits arising from the investment of such proceeds, other than in property for the property rental business, shall be treated as property profits during the period of 24 months commencing on—

(i) date of disposal, where subsection (1)(a) applies, or

(ii) date of issue of ordinary share capital, where subsection (1)(b) applies,

and as not being property profits thereafter.

(b) Any apportionment of profits for the purpose of paragraph (a) shall be made in accordance with section 4(6).

(3) Where the proceeds are held at any time after the date on which the period referred to in subsection (2) ends, the proceeds are to be treated as being assets of the residual business after that date.

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