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Opinion Letter Re: Certain Federal Income Tax Matters

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Date:
2003
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            [Letterhead of Skaddan, Arps, Slate, Meagher & Flom LLP]


                                                  July 2, 2003

Newcastle Investment Corp.
1251 Avenue of Americas
New York,  New York 10020


                  Re:      Certain Federal Income Tax Matters

Ladies and Gentlemen:

                  You have requested our opinion concerning certain Federal
income tax considerations in connection with the offering (the "Offering") by
Newcastle Investment Corp., a Maryland corporation ("Newcastle"), of shares of
its Common Stock, $.01 par value per share (the "Common Stock"), pursuant to a
Registration Statement on Form S-11 (No. 333-106135) filed with the Securities
and Exchange Commission (the "Commission"), as amended through the date hereof
(the "Registration Statement").

                  We have acted as tax counsel to Newcastle in connection with
the Offering, and we have assisted in the preparation of the Registration
Statement and certain other documents. In connection with this opinion, we have
examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement and such other documentation and
information provided by you as we have deemed necessary or appropriate as a
basis for the opinion set forth herein. In addition, you have provided us with,
and we are relying upon, a certificate containing certain factual
representations and covenants of officers of Newcastle (the "Officers'
Certificate") relating to, among other things, the actual and proposed
operations of Newcastle and the entities in which it holds, or has held, a
direct or indirect interest (collectively, the "Company"). For purposes of our
opinion, we have not made an independent investigation of the facts,
representations and covenants set forth in the Officers' Certificate, the
Registration Statement, or in any other document. In particular, we note that
the Company has engaged in, and may engage in, transactions in connection with
which we have not provided legal advice, and have not reviewed, and of which we
may be unaware. We have, consequently, assumed and relied on your
representations that the information presented in the Officers' Certificate,
Registration Statement and other documents, or otherwise furnished to us,
accurately and completely describes all material facts relevant to our opinion.
We have assumed that such statements, representations and

covenants are true without regard to any qualification as to knowledge or
belief. Our opinion is conditioned on the continuing accuracy and completeness
of such statements, representations and covenants. Any material change or
inaccuracy in the facts referred to, set forth, or assumed herein or in the
Officers' Certificate may affect our conclusions set forth herein. We have, at
your request, also relied upon: (i) the opinion of Brown & Wood LLP, dated May
5, 1999, regarding the qualification of Impac Commercial Holdings, Inc. as a
real estate investment trust ("REIT"), (ii) the opinion of Thacher Proffitt &
Wood, dated July 22, 1999, in connection with issuance of certain notes by
Fortress CBO Investments I, Limited and Fortress CBO Investments I Corp., (iii)
the opinion of Sidley & Austin, dated November 17, 1999, in connection with the
issuance of certain certificates by Fortress Commercial Mortgage Trust 1999-PC1,
(iv) the opinion of Sidley & Austin, dated May 27, 1999, in connection with the
issuance of certain certificates by Government Lease Trust, (v) the opinion of
Sidley Austin Brown & Wood, dated December 31, 2001, in connection with the
issuance of certain notes by FIC GSA Mezzanine Borrower LLC and FIC Houston LLC,
and (vi) the opinion of Thacher Proffitt & Wood, dated July 12, 2002, in
connection with the issuance of certain bonds by Impac CMB Trust 1998-C1, each
of which opinions is included as an exhibit to the Registration Statement.

                  In our review of certain documents in connection with our
opinion as expressed below, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
authenticity of the originals of such copies. Where documents have been provided
to us in draft form, we have assumed that the final executed versions of such
documents will not differ materially from such drafts.

                  Our opinion is also based on the correctness of the following
assumptions: (i) Newcastle will file an election to be taxed as a real estate
investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended
(the "Code") with its 2002 tax return, (ii) Newcastle and each of the entities
comprising the Company has been and will continue to be operated in accordance
with the laws of the jurisdiction in which it was formed and in the manner
described in the relevant organizational documents, (iii) there will be no
changes in the applicable laws of the State of Maryland or of any other state
under the laws of which any of the entities comprising the Company have been
formed, and (iv) each of the written agreements to which the Company is a party
will be implemented, construed and enforced in accordance with its terms.

                  In rendering our opinion, we have considered and relied upon
the Code, the regulations promulgated thereunder ("Regulations"), administrative
rulings and other interpretations of the Code and the Regulations by the courts
and the Internal Revenue Service ("IRS"), all as they exist at the date hereof.
It should be noted that the Code, Regulations, judicial decisions, and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change that is made after the
date hereof in any of the foregoing bases for our opinion could affect our
conclusions set forth herein. In this regard, an opinion of counsel with respect
to an issue


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represents counsel's best judgment as to the outcome on the merits with respect
to such issue, is not binding on the IRS or the courts, and is not a guarantee
that the IRS will not assert a contrary position with respect to such issue or
that a court will not sustain such a position if asserted by the IRS.


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