Real Estate Investment Trusts (REITs)
Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the rents received from the properties and receive capital gains as properties are sold at a profit. REITs have been formed by a number of large financial institutions such as banks and insurance companies. The stocks of many of them are traded on security exchanges, thereby providing investors with a marketable interest in real estate investment portfolio. By law, REITs have to distribute 95 percent of their income to shareholders, and in turn they are exempt from corporate taxes on income or gains. In exchange for this special tax treatment, REITs are subject to numerous qualifications and limitations including:
- Qualified asset and income tests. REITs are required to have at least 75% of their value represented by qualified real estate assets and to earn at least 75% of their income from real estate investments.
- Shareholder qualifications. Generally, REITs are not permitted to be closely held and must have a minimum of 100 shareholders.
Popular Real Estate Terms
Legal contract with a property owner empowering a real estate agent in selling, leasing, or mortgaging the principal's property. A listing has a legal description of the property, is valid ...
Time period of an estate based on how long a third party lives. ...
A situation that occurs when borrowed funds cost more than they produce. ...
When a debtor defaults on a loan for which a deed of trust is given, the trustee is required to have a sale of the real estate security for the benefit of the lender. A deed of trust is ...
Used ton convey property of a minor or legally incompetent person. ...
Any of a number of types of covenants agreeing to do or not to do something that is attached to the title and is passed form one owner to the next. See also covenant running with the land. ...
What is the meaning of a story, and what is it good for? The story definition is a floor, level, or deck in a construction or building. What does story mean in real estate? A real ...
Annual rate of inflation of 10% or higher. ...
Lumber of no more than 8 inches wide and 2 inches thick. ...
Have a question or comment?
We're here to help.