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Know your real estate: Jargons: Real Estate Investment Trusts (REITs)

A legally constituted organization (entitled to preferential tax treatment) which enables investors to own and transfer shares of an interest in a property or properties; the shares can be dealt with in a manner similar to corporate stock. In order to qualify, a trust must be formed by at least 100 shareholders and invest most of its capital in real estate loans or properties and receive income from them. The special feature is that such a trust reduces its own taxable income by a distribution to shareholders with no tax deducted, but this is taxable income in the hands of shareholders according to their own tax status. To maintain the trust’s right to gross distributions these must, in aggregate, be equal to minimum of 710 of the total trust income.


Source: Indiaproperties

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