The Taxman Cometh: REITs and Taxes


Unfortunately, it’s that time of year again. That dreaded time that sneaks up on you no matter how much you hide under the covers.

That’s right, people. Cue the dread-inducing music.

It’s tax season. Which means, if you invest or have ever thought about investing in real estate investment trusts, or REITs… you’ve got plenty of questions to answer and be answered.

As the REIT structure is inherently a tax-code creation, these questions are inevitable. Yet investors are generally pleasantly surprised with the answers, as REITs are more tax-friendly than many assume.

Don’t believe me? Fair enough.

But I think I can change your mind by the end of this article.

For one thing, since their creation in 1960, REITs have always seemed to be in the government’s good graces – both with legislators and tax authorities. Under the goal of democratizing real estate investing for the masses, REITs enjoy significant tax advantages. This includes avoiding double taxation that’s always somehow passed through to the end-investors.

Investors often assume this must come with additional tax complications. But, believe it or not, that’s generally not the case.

From a tax reporting perspective, an investor’s experience with REITs shouldn’t be any different than a typical dividend-paying stock. Admittedly, at the company-level, it does get a bit more complex.

But investors? We don’t have to worry about that…Read more>>