Real Estate Investment Trusts (REITs)
Definition of "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
In land surveying, the point al which two properties intersect constituting a boundary line between the properties. A corner can be determined by either a survey or general agreement ...
Map that shows the location and boundaries of individual properties. ...
Document describing the benefits and provisions for people or businesses covered by group insurance. Document in life and health insurance issued to a member of a group insurance plan ...
What does Act of God mean? Acts of God or “force majeure” is typically how an insurance policy classifies peril situations that could not be prevented or defended by men. ...
Number of times a given amount of capital assets turn over to generate sales over a given period of time. ...
A binding judicial determination of the rights and standing of litigants. A declaratory judgment does not result in any relief for the action brought before the court. It merely ...
Horizontal wood siding commonly used on the exterior of buildings which overlap each other. ...
The profit or loss from selling an investment that is held one year or less. Short-term gains are ordinary income, while short-term losses are deducted from current income. Short-term gains ...
Generally, a tight market does not offer too much opportunity for negotiations. More precisely, a tight market means a trading environment where the spreads between the asking and ...
Have a question or comment?
We're here to help.