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The Four Types of REITs
There are many different REIT structures, but we will cover four popular REIT types available to investors. Some you might not have heard of. The requirements to invest in these REITs span a wide range, meaning there’s something for everyone.
1031 vs 721 Exchange: What is the Difference?
Mention the word “real estate exchange,” and what might come to mind is the 1031 exchange. This process falls under 26 U.S. Code § 1031 – “Exchange of Real Property Held for Productive Use or Investment.” The goal here is to help the investor “swap” a relinquished real estate asset into a replacement one. In this way, both depreciation capture and capital gains taxes can be deferred.
An Overview of REITs
REITs allow investors to get involved with real estate investing passively. There’s no property management as is often required with real property. An investor’s equity in a REIT turns into fractional ownership of real estate. There are many types of REITs to choose from. In this article, we’ll give an overview of several different types of REITs.
When was the 721 Exchange Created?
The 721 exchange, also known as a contribution or an Umbrella Real Estate Investment Trust (UPREIT) exchange, is a tax-deferred transaction that allows investors to exchange their ownership in a property for ownership in a larger, more diversified real estate investment without incurring immediate taxes on the gains from the sale of the original property.
Are REIT Dividends Taxed as Ordinary Income?
REITs can provide a low capital entry point for those who want to get involved with real estate investing. They can provide dividends and potential capital appreciation. However, taxation is quite different between REITs and real property. Do REIT dividends offer any of the tax benefits that real property income provides, or is it all taxed as ordinary income?
How Are REIT Dividends Taxed?
REIT dividends can have a mixture of taxation. This all depends on the specific REIT. Because of these differences, understanding the taxation of REIT dividends can be somewhat complex. In this article, we’ll discuss how REIT dividends might be taxed.
Are REITs a Good Investment During Inflation?
Some people consider direct real estate investments to be an inflation hedge. But direct real estate investing and REIT (real estate investment trust) investing are two very different worlds. Are REITs also considered an inflation hedge? That’s what we’ll explore in this article.
When Did REITs Start?
A REIT is a Real Estate Investment Trust. This fractional investment structure provides an opportunity for investors to participate in commercial real estate without being involved in the actual management or maintenance of the property. REITs own, operate, or finance properties intending to earn income for their investors. They work like mutual funds. The REIT Act was part of the Cigar Excise Tax Extension of 1960, passed by Congress and signed by President Eisenhower to broaden access to real estate investing. REITs were advanced further with the Tax Reform Act of 1986, which enabled REITs to operate and manage real estate in addition to owning or financing it.
Are REITs Redeemable?
Real estate investors can choose to buy investment properties directly or place their money into a real estate fund. If you're interested in real estate investing but want to add even more diversification to your portfolio, you could also consider investing in a real estate investment trust (REIT). These are companies that are designed specifically to own and operate real estate that generates income. While REITs are often considered alternative investments, you may be wondering if this type of investment is redeemable. Here's a closer look at what REITs are and if they can be redeemed.
Are REITs Required to Pay Dividends?
Investors evaluating options in real estate have ample choices. They can buy property directly and either manage it or use a property manager. They can collaborate with other investors through tenancy-in-common structures or crowdfunding syndications. Or they can invest in a Real Estate Investment Trust (REIT).
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