What is a REIT?
A REIT is a company that owns, and in most cases, operates income-producing real estate such as apartments, shopping centers, offices, hotels and warehouses. Some REITs also engage in financing real estate. The shares of many REITs are freely traded, usually on a major stock exchange.To qualify as a REIT, a company must distribute at least 90 percent of its taxable income to its shareholders annually. A company that qualifies as a REIT is permitted to deduct dividends paid to its shareholders from its corporate taxable income. As a result, most REITs remit at least 100 percent of their taxable income to their shareholders and therefore owe no corporate tax. Taxes are paid by shareholders on the dividends received and any capital gains. Most states honor this federal treatment and also do not require REITs to pay state income tax. Like other businesses, but unlike partnerships, a REIT cannot pass any tax losses through to its investors.
A Real Estate Investment Trust (REIT) is a way for individual investors to invest in commercial real estate. A REIT is a corporation or business that combines the capital of many investors to acquire or provide financing for all forms of real estate, including, but not limited to, apartments, offices, self storage and shopping centers. A REIT serves much like a mutual fund for real estate in that retail investors enjoy the benefit of a diversified portfolio under professional management. As of 12/31/05, there were approximately 200 publicly traded REITs.
A REIT, or a real estate investment trust, is a corporation that purchases, owns and manages real estate properties and/or real estate loans. Some REITs also develop properties or originate loans. REITs were established in 1960 and operate under Subchapter M, subject to revisions from RIETSA. This legislation provides REITs with a special tax status that allows them to avoid corporate tax as long as nearly all REIT income is distributed to investors. Although the REIT structure avoids double taxation to shareholders, tax losses cannot be passed through. With over 300 corporations qualifying as REITs, approximately one-third are private with the remainder traded on public stock exchanges. There are three types of REITs; equity, mortgage and hybrid – as defined below. An Equity REIT (real estate investment trust) is a corporation that purchases, owns and manages real estate properties; it does not own or originate real estate loans. It may also develop properties. (For more information a
A REIT is a company that owns, and in most cases, operates income-producing real estate such as apartments, shopping centers, offices, hotels and warehouses. Some REITs also engage in financing real estate. The shares of many REITs are freely traded, usually on a major stock exchange. To qualify as a REIT, a company must distribute at least 90 percent of its taxable income to its shareholders annually. A company that qualifies as a REIT is permitted to deduct dividends paid to its shareholders from its corporate taxable income. As a result, most REITs remit at least 100 percent of their taxable income to their shareholders and therefore owe no corporate tax. Taxes are paid by shareholders on the dividends received and any capital gains. Most states honor this federal treatment and also do not require REITs to pay state income tax. Like other businesses, but unlike partnerships, a REIT cannot pass any tax losses through to its investors.
A REIT is a company that owns, and in most cases, operates income-producing real estate such as apartments, shopping centers, offices, hotels and warehouses. Some REITs also engage in financing real estate. The shares of most REITs are freely traded, usually on a major stock exchange.A company that qualifies as a REIT is permitted to deduct dividends paid to its shareholders from its corporate taxable income. As a result, most REITs remit at least 100 percent of their taxable income to their shareholders and therefore owe no corporate tax. Taxes are paid by shareholders on the dividends received and any capital gains. Most states honor this federal treatment and also do not require REITs to pay state income tax. To qualify as a REIT, a company must distribute at least 90 percent of its taxable income to its shareholders annually. However, like other businesses, but unlike partnerships, a REIT cannot pass any tax losses through to its investors.
