Dividends are the big reason investors turn to real estate investment trusts or REITs. What many people don’t know is that those dividends are not taxed like normal dividend stocks. Thanks to an overly confusing tax code, owning REITs can get complicated. Understanding the REIT taxation rules could save you from a big charge when it’s time to file your taxes.
How Are REITs Taxed?
Real estate investment trusts were established to allow small investors access to large income producing real estate assets, much like how mutual funds provide access to stocks. In doing so, REITs were giving a special tax designation used to cut their corporate taxes.
In return for the corporate tax benefits, REITs must pay out 90% of their taxable income to shareholders in the form of dividends. While the REIT tax code simplifies things from a corporate perspective, this is where it gets confusing for shareholders. Continue Reading…
The headlines are full of market anomalies this time of year. In December it’s the Santa Claus Rally. January it’s the ever original January Effect. After this weekend you’ll see the Super Bowl Indicator. Then comes Sell in May. It’s a seasonal thing, offering a break from the back and forth between stock market corrections and bubble headlines we’ve seen more of these past five years.
Last week I dug into