Jasz
VIP Contributor
A REIT is a Real Estate Investment Trust, which means that it's an investment fund that invests in real estate. This can mean owning and operating physical property, but it can also mean investing in mortgages and property loans.
Unlike dividends paid by regular corporations, REIT dividends are generally considered taxable at the shareholder level as ordinary income.
To qualify as a REIT, a company must distribute at least 90% of its income to shareholders by the end of each year. This means that shareholders will not pay taxes on their REIT dividends until they file their personal income tax return for the year.
The REIT then has to file a Form 1099-DIV with the IRS, which informs the IRS of how much dividend income each shareholder received from that REIT during that year. This is why it is important to make sure your brokerage firm has your Social Security number on file so that you don't get taxed twice on your REIT dividend earnings.
Because the REIT pays out all of its profits to shareholders on an annual basis, this makes it a good option for investors who want to actively manage their tax liability. However, the investment is somewhat risky because there is no guarantee that the REIT will continue to make money every year. It will also be affected by changes in real estate prices.
Unlike dividends paid by regular corporations, REIT dividends are generally considered taxable at the shareholder level as ordinary income.
To qualify as a REIT, a company must distribute at least 90% of its income to shareholders by the end of each year. This means that shareholders will not pay taxes on their REIT dividends until they file their personal income tax return for the year.
The REIT then has to file a Form 1099-DIV with the IRS, which informs the IRS of how much dividend income each shareholder received from that REIT during that year. This is why it is important to make sure your brokerage firm has your Social Security number on file so that you don't get taxed twice on your REIT dividend earnings.
Because the REIT pays out all of its profits to shareholders on an annual basis, this makes it a good option for investors who want to actively manage their tax liability. However, the investment is somewhat risky because there is no guarantee that the REIT will continue to make money every year. It will also be affected by changes in real estate prices.
