How Is An Investment In A REIT Taxed?

Real Estate
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Jim Marshall, EA
Distributions from a REIT are treated similar to any other stock or mutual fund with ordinary dividends, qualified dividends, capital gain dividends and depending on the nature of the REIT may have larger non-taxable distributions (return of capital) than most stocks. The holding period is the same as any other stock for determination of long-term and short-term gain on sale.
Leave a Comment 46 weeks ago

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Charles Woodson, EA
A REIT is similar to a mutual fund; as long as the REIT distributes at least 90% of its income the tax is paid by the investor as dividends. A significant portion of dividends may be nondividend distributions which is generally the depreciation portion of the operating revenue. Nondividend distributions are a return of capital; once the full amount of the REIT investment has been recovered, all dividends are considered taxable and would normally be long-term since the holding period is likely to have been more than 1 year.
Leave a Comment 46 weeks ago

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