A Real Estate Investment Trust or REIT is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. REITs invest in different kinds of real estate or real estate related assets. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. Like other corporations, REITs can be publicly or privately held. Public REITs may be listed on public stock exchanges like shares of common stock in other firms.
Fulton Georgia Real Estate Investment Trust - REIT
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Multi-State
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Fulton
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US-02084BG
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Calculating Yield for REIT Dividends Add the total amount of dividends the REIT paid out over a 12-month period or over a quarterly time frame if the REIT pays dividends each quarter.Divide this number by the REIT's current share price. Multiply by 100 to express this number as a percentage.
Many investors are attracted to the diversification made possible by REITs so many wonder if such an attractive investment qualifies for a 1031 exchange. The bad news: REITs do not qualify as suitable replacement property for a 1031 exchange.
Individuals can invest in REITs in a variety of different ways, including purchasing shares of publicly traded REIT stocks, mutual funds and exchange-traded funds. REITs also play a growing role in defined benefit and defined contribution investment plans.
An investor is not able to do a direct 1031 exchange into a REIT since REIT shares are not considered like kind property by the IRS for the purposes of a 1031 exchange.
To qualify as a REIT in Canada; Make sure that your REIT is a publicly-traded unit trust. Registering your company to achieve a certificate of incorporation. Submit all details and documents under the income tax act of Canada.
The ongoing requirements for a REIT are: Pay 90% of the REIT's taxable income to investors in dividends. At least 75% of the REIT's assets must be in real estate, or real estate mortgages, quarterly. At least 75% of the REIT's gross income must come from rental income or mortgage interest.
A public REIT can be bought and sold at will, which means it could be held for as short or as long a period as the investor desires. DST offerings require a long term commitment, typically a 5-10 year time horizon, during which time an investor is not able to access their capital.
In order to qualify as a REIT, a company must make a REIT election by filing an income tax return on Form 1120-REIT. Since this form is not due until March, the REIT does not make its election until after the end of its first year (or part-year) as a REIT.
To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
In short, no, it is not possible to use REIT shares as a replacement property in a 1031 Exchange.