What Qualifies a REIT?
In order for a corporation or trust to qualify as a REIT, it must comply with certain provisions of the Internal Revenue Code. Thus, a REIT must: • be a corporation, business trust or similar association • be managed by a board of directors or trustees; • have shares that are fully transferable; • have a minimum of 100 shareholders • have no more than 50% of the shares held directly or indirectly by five or fewer individuals; • invest at least 75% of the total assets in qualifying real estate assets; • derive at least 75% of gross income from rents from real property, or interest on mortgages on real property; • distribute at least 90% of otherwise taxable income.
