Kennedy-Wilson Holdings, Inc.KW
Kennedy-Wilson Holdings, Inc. Income Taxes Disclosure
INCOME TAXES
The table below represents a geographical breakdown of book income (loss) income before the provision for (benefit from) income taxes:
| Year ended December 31, | ||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Domestic | $ | 48.6 | $ | (40.3) | $ | (238.8) | ||||||||||||||
| Foreign | (11.2) | 16.8 | (97.9) | |||||||||||||||||
| Total | $ | 37.4 | $ | (23.5) | $ | (336.7) | ||||||||||||||
The U.S. and foreign components of provision for income taxes consisted of the following components. However, it is not reflective of the cash tax results of the Company.
| Year ended December 31, | ||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Federal | ||||||||||||||||||||
| Current | $ | — | $ | — | $ | — | ||||||||||||||
| Deferred | (1.3) | (11.8) | (66.0) | |||||||||||||||||
| (1.3) | (11.8) | (66.0) | ||||||||||||||||||
| State | ||||||||||||||||||||
| Current | 0.5 | 5.6 | 0.7 | |||||||||||||||||
| Deferred | 7.3 | (1.1) | 0.8 | |||||||||||||||||
| 7.8 | 4.5 | 1.5 | ||||||||||||||||||
| Foreign | ||||||||||||||||||||
| Current | 5.2 | 15.0 | 9.9 | |||||||||||||||||
| Deferred | 1.9 | 2.5 | (0.7) | |||||||||||||||||
| 7.1 | 17.5 | 9.2 | ||||||||||||||||||
| Provision for (benefit from) income taxes | $ | 13.6 | $ | 10.2 | $ | (55.3) | ||||||||||||||
Total income taxes paid for the year ended December 31, 2025 were as follows:
| (Dollars in millions) | Year Ended December 31, 2025 | |||||||
| Federal | $ | — | ||||||
| State | 3.3 | |||||||
| Non-US | ||||||||
| Ireland | 11.7 | |||||||
| Other Non-US | (0.1) | |||||||
| Total income taxes paid | $ | 14.9 | ||||||
A reconciliation of the statutory federal income tax rate of 21% with Kennedy Wilson’s effective income tax rate is as follows under the new ASU 2023-09 presentation:
| (Dollars in millions) | Year Ended December 31, 2025 | ||||||||||
| Tax Expense/(Benefit) at US Federal Rate | $ | 7.8 | 21.0 | % | |||||||
State and Local Income Taxes, net of Federal Income Tax Effect(1) | 6.1 | 16.4 | % | ||||||||
| Foreign Tax Effects | |||||||||||
| United Kingdom | |||||||||||
| UK Corporate Tax Imposed on Jersey Entities | 2.2 | 6.0 | % | ||||||||
| Nondeductible Interest | 2.9 | 7.7 | % | ||||||||
| Changes in valuation allowance | 1.6 | 4.2 | % | ||||||||
| Other | 1.3 | 3.5 | % | ||||||||
| Ireland | |||||||||||
| Statutory Tax Rate Difference between foreign and U.S. | (8.6) | (23.1) | % | ||||||||
| Irish Real Estate Fund Withholding Tax | 2.1 | 5.5 | % | ||||||||
| Other | 0.1 | 0.2 | % | ||||||||
| Other foreign jurisdictions | 0.9 | 2.3 | % | ||||||||
| Effect of Cross-Border Tax Laws | |||||||||||
| Subpart F Income | 7.9 | 21.3 | % | ||||||||
| Foreign flow-through and branch income | (0.9) | (2.4) | % | ||||||||
| Foreign tax credit | (2.4) | (6.4) | % | ||||||||
| Other | — | 0.1 | % | ||||||||
| Nontaxable or Nondeductible items | |||||||||||
| Nondeductible compensation | 5.1 | 13.5 | % | ||||||||
| NCI allocation | (3.8) | (10.2) | % | ||||||||
| Changes in valuation allowance | (9.3) | (24.8) | % | ||||||||
| Other adjustments | 0.6 | 1.6 | % | ||||||||
| Income tax expense and effective income tax rate | $ | 13.6 | 36.4 | % | |||||||
(1) State and local taxes in California comprise the majority of this category.
A reconciliation of the statutory federal income tax rate of 21% with Kennedy Wilson’s effective income tax rate for the years ended December 31, 2024 and 2023 is as follows:
| Years Ended December 31, | ||||||||||||||
| (Dollars in millions) | 2024 | 2023 | ||||||||||||
| Tax computed at the statutory rate | $ | (4.9) | $ | (70.7) | ||||||||||
| Domestic permanent differences, primarily disallowed executive compensation | 6.8 | 8.7 | ||||||||||||
| Foreign permanent differences, primarily non-deductible depreciation, amortization and interest expenses in the United Kingdom | 1.0 | 1.9 | ||||||||||||
| Effect of foreign operations, net of foreign tax credit | 5.6 | 11.2 | ||||||||||||
| Noncontrolling interests | 0.2 | (5.1) | ||||||||||||
| State income taxes, net of federal benefit | (1.1) | (7.8) | ||||||||||||
| Other | 2.6 | 6.5 | ||||||||||||
| Provision for (benefit from) income taxes | $ | 10.2 | $ | (55.3) | ||||||||||
Cumulative tax effects of temporary differences are shown below at December 31, 2025 and 2024:
| Year ended December 31, | ||||||||||||||
| (Dollars in millions) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Foreign currency translation | $ | — | $ | 1.2 | ||||||||||
| Net operating loss carryforward and credits | 131.5 | 135.3 | ||||||||||||
| Depreciation and amortization | 125.1 | 90.8 | ||||||||||||
| Investment basis difference | 137.1 | 101.3 | ||||||||||||
| Stock option expense | 2.6 | 1.7 | ||||||||||||
| Hedging transactions | 28.4 | 17.0 | ||||||||||||
| Lease liability | 1.4 | 0.1 | ||||||||||||
| Capitalized interest | 0.6 | 0.2 | ||||||||||||
| Accrued reserves | 7.2 | 6.4 | ||||||||||||
| Total deferred tax assets | 433.9 | 354.0 | ||||||||||||
| Valuation allowance | (280.6) | (277.5) | ||||||||||||
| Net deferred tax assets | 153.3 | 76.5 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Investment basis and reserve differences | 361.5 | 288.7 | ||||||||||||
| Prepaid expenses and other | 4.5 | 5.5 | ||||||||||||
| Foreign currency translation | 2.2 | — | ||||||||||||
| Right of use asset | 1.4 | — | ||||||||||||
| Total deferred tax liabilities | 369.6 | 294.2 | ||||||||||||
| Deferred tax liability, net | $ | (216.3) | $ | (217.7) | ||||||||||
During the year ended December 31, 2019, the United Kingdom enacted a Finance Act, which introduced a new capital gain tax for non-UK resident investors who dispose of UK real estate. The new capital gain tax law became effective on April 6, 2019. Beginning on this date, non-UK resident investors are subject to UK tax on gains arising from the direct and indirect dispositions of UK real estate held for investment purposes. Transitional provisions allowed for rebasing of UK real estate values to fair market value as of April 5, 2019 ("UK Basis Step-Up"). Accordingly, only gains arising from property value increases after April 5, 2019 are subject to tax. The step-up led to a higher tax basis relative to the carrying value of the UK real estate, thus resulting in a UK deferred tax asset of $107.0 million. The realizability of this deferred tax asset is dependent on future disposition of real estate at a fair market value in excess of appraised value as of April 5, 2019. Given uncertainties surrounding Brexit and its potential impact on future real estate values, the Company concluded that the U.K. deferred tax asset did not meet the more likely than not threshold of being realizable. Therefore, a full valuation allowance was recorded against the UK deferred tax asset. As the economic environment in the UK real estate market is still uncertain and highly depended on numerous general economic factors, including but not limited to rising interest rates, foreign currency fluctuations, inflation, etc, the Company has maintained a full valuation allowance against its UK Basis Step-Up deferred tax asset. During fiscal year 2025, the valuation allowance on the UK Basis Step-Up increased to $189.4 million, primarily due to current year depreciation expense.
During March 2018, Kennedy Wilson elected to treat KWE as a partnership for U.S. tax purposes retroactive to December 29, 2017. Due to unrealized foreign exchange losses not yet deductible for tax purposes and the consideration paid to acquire the non-controlling interests in KWE exceeding the book carrying value of the non-controlling interests in KWE, the Company’s tax basis in KWE exceeded its book carrying value at December 29, 2017, and every period thereafter. Prior to the election to treat KWE as a partnership, KWE was taxed as a controlled foreign corporation. As a controlled foreign corporation, the Company was precluded from recognizing a deferred tax asset for its tax basis in excess of book carrying value for its investment in KWE as the excess tax basis from the investment was not expected to reverse in the foreseeable future. However, as a result of the conversion of KWE to a partnership for U.S. tax purposes, the Company was required to record a deferred tax asset for its investment in KWE. As of December 31, 2018, the Company recorded a $98.3 million deferred tax asset related to its excess tax basis over book carrying value for its investment in KWE. As a significant portion of the excess tax basis would only reverse upon a strengthening of foreign currencies or upon a disposition of KWE, the Company determined that a valuation allowance of $98.3 million was required for the tax basis that was in excess of the Company’s carrying value for its investment in KWE as it did not meet the more likely than not recognition threshold. During the year ended December 31, 2024, the Company's excess tax basis over book basis in KWE increased, primarily due to higher tax gains on sales of real estate. During the year ended December 31, 2025, the Company's excess tax basis over book basis in KWE decreased,
primarily due to higher tax losses on sales of real estate. As of December 31, 2025, Kennedy Wilson’s excess tax basis in KWE and the related valuation allowance were $76.0 million and $59.3 million, respectively.
As of December 31, 2025, Kennedy Wilson had California and other state net operating losses of $98.3 million and $9.5 million, respectively. California net operating losses begin to expire in 2035. As of December 31, 2025, Kennedy Wilson had $142.8 million of foreign net operating loss carryforwards, which have no expiration date. The Company has foreign tax credit carryforwards of $87.4 million, of which $0.2 million begin to expire in 2026.
The Company's valuation allowance on deferred tax assets decreased by $3.1 million in 2025 and decreased by $5.8 million in 2024. The decrease in the valuation allowance during 2025 primarily relates to a decrease in the excess tax over book basis in KWE. The decrease in the 2024 primarily relates to a partial release of the valuation allowance against the deferred tax asset associated with our excess tax basis in KWE investment relating to assets intended for sale in the foreseeable future.
In June 2021, the Company received a notification of a general tax inquiry being conducted by the Spanish tax authorities for several of its Spanish entities for tax years 2016 and 2017. As a result of the Spanish tax inquiry, management has reassessed the Company’s prior Spanish tax filing positions and the need to accrue additional taxes. Based on this reassessment, the Company believes that no additional Spanish tax accruals are required.
Kennedy Wilson’s federal and state income tax returns remain open to examination for the years 2022 through 2024 and 2021 through 2024, respectively. However, due to the existence of prior year loss carryovers, the IRS may examine any tax years for which the carryovers are used to offset future taxable income. Our foreign subsidiaries’ tax returns remain open to examination for the years 2021 through 2024. The Spanish loss carryovers may be subject to tax examination for a period of 10 years from the period in which such losses were generated.
As of December 31, 2025, the company does not have any unrecognized tax benefits.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.