What Qualifies As A REIT?
In order for a corporation to qualify as a REIT, it must comply with certain provisions with the Internal Revenue Code. As required by the Tax Code, 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 percent of the shares held by five or fewer individuals during the last half of each taxable year; invest at least 75 percent of the total assets in real estate assets; • derive at least 75 percent of gross income from rents from real property, or interest on mortgages on real property; pay dividends of at least 90 percent of REIT taxable income.
