In recent years two changes in Canadian tax policy have targeted the income trust sector. The first, in November 2005, was intended to reduce the disparity between taxes on corporate dividends and income trust distributions. The second, in October 2006, introduced a plan to phase out the favourable tax treatment of income trusts altogether. However, qualifying real estate investment trusts (REITs) were excluded from this plan. The present study examines the valuation consequences for REITs of the changes in tax policy.