REITs must distribute at least 90% of their Net Investment Income to be “regulated” under Subchapter M and thus qualify for conduit tax treatment. In addition, 75% of the REIT’s assets must be invested in real estate related activities and 75% of its income must come from real estate related activities.
Which sources of REIT income are counted towards the 75 test required by Subchapter M?
The 75 percent test is comprised solely of real estate income. At least 75 percent of a REIT’s gross income must be derived from rents from real property, interest on obligations secured by mortgages on real property, dividends from other REITs, and gain from the sale or other disposition of real property.
Which sources of REIT income are counted towards the 75%?
To qualify as a REIT a company must: Invest at least 75% of its total assets in real estate. Derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate.
What are sources of REIT income?
Most REITs have a straightforward business model: The REIT leases space and collects rents on the properties, then distributes that income as dividends to shareholders. Mortgage REITs don’t own real estate, but finance real estate, instead. These REITs earn income from the interest on their investments.
Losses may be passed through to shareholders under “conduit” tax treatment a. … Answer: C RIETS must distribute at least 90% of their Net Investment Income to shareholders; and invest at least 75% of their assets in real estate activities; to be regulated under Subchapter M.
What is REIT testing?
Income testing is a vital aspect of compliance for real estate investment trusts (REITs). These income tests are based on the gross income, as computed for tax purposes, from the various properties that a REIT owns, including the REIT’s share of income from underlying partnerships (based on its capital ownership).
What is REIT accounting?
Real Estate Investment Trusts require sophisticated tax and accounting expertise to manage their complex regulatory and audit obligations. Cost-control, managing efficiencies and streamlining operations are important components of a profitable REIT.
Where is REIT NAV?
NAV equals the estimated market value of a REIT’s total assets (mostly real property) minus the value of all liabilities. When divided by the number of common shares outstanding, the net asset value per share is viewed by some as a useful guideline for determining the appropriate level of share price.
Can a REIT own another REIT?
A REIT cannot own, directly or indirectly, more than 10% of the voting securities of any corporation other than another REIT, a taxable REIT subsidiary (TRS) or a qualified REIT subsidiary (QRS).
What tax form do REITs file?
Use Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts, to report the income, gains, losses, deductions, credits, certain penalties, and to figure the income tax liability of a REIT.
What is a REIT fund?
A real estate investment trust (REIT) is a corporation that invests in income-producing real estate and is bought and sold like a stock. A real estate fund is a type of mutual fund that invests in securities offered by public real estate companies, including REITs.
What are REITs in India?
Mindspace Business Parks REIT, which is sponsored by K Raheja Corp and Blackstone Group, has announced a net operating income of over Rs 358 crore, with a portfolio size of 30.2 million sq ft, up from 29.5 million sq ft.
Is there a REIT Index?
The MSCI US REIT Index is a free float-adjusted market capitalization weighted index that is comprised of equity Real Estate Investment Trusts (REITs). The index is based on the MSCI USA Investable Market Index (IMI), its parent index, which captures the large, mid and small cap segments of the USA market.
REITs can distribute net income to shareholders in the form of dividends; and can distribute capital gains under the “conduit” taxation rules of Subchapter M. They cannot distribute capital losses; nor can they distribute “interest.”
Which statement is true about equity REITs?
Which statements are TRUE about Equity REITs? The best answer is C. Equity REIT share prices and overall stock market prices are negatively correlated. When stock prices are flat or falling, Equity REIT prices tend to rise (and vice-versa).
What is the main objective of investing in equity REIT?
Equity REITs acquire commercial properties that run the gamut from shopping centers to hotels to office complexes to apartments. The goal in acquiring these properties is to generate income by collecting rent from tenants and businesses who lease the space.