New Tax Law Benefits

Applicable to REIT Ordinary Income Distributions

  • Under the “Tax Cuts & Jobs Act”, REIT ordinary income distributions now benefit from a 20% tax deduction1 which effectively reduces the tax rate from 37% to 29.6% for individuals in the highest tax bracket.
  • Other tax benefits for REIT distributions remain unchanged:

    • REIT pass-through treatment of earnings remains unchanged
    • Favorable tax treatment for Return of Capital (ROC) remains unchanged. ROC generally resulting from depreciation and amortization may decrease the taxable portion of REIT income in the current year. The depreciation and amortization may later be recaptured upon sale as capital gain, which is currently taxed at a lower rate than ordinary income.

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    Understanding REITs


    Example of Tax Benefit Under the Tax Cuts & Jobs Act

    $1,000,000 investment; 5% annualized rate (pre-tax); highest tax bracket of 37%

    Understanding REITs



    1. Enacted on December 22, 2017, effective for tax years beginning after December 31, 2017 but does not apply to tax years beginning after December 31, 2025.
    2. Assumes all distributions are ordinary distributions and not capital gain distributions.
    Source: EY.

    THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. AN OFFERING IS MADE ONLY BY A PROSPECTUS. A COPY OF A PROSPECTUS MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH AN OFFERING.