Investment vehicle

Real Estate Investment Trust (REIT)

A company or trust that elects REIT status under the Internal Revenue Code and meets income, asset, and distribution tests.

Note: "Real Estate Investment Trust (REIT)" is a investment vehicle, not necessarily a standalone legal trust form. Its rules depend on the underlying arrangement and applicable law.

Typical purpose

Allows investors to own shares of real estate portfolios.

How it operates

Managed by a board and advisers; must distribute most taxable income.

Who might use it

Investors seeking real estate exposure; sponsors raising capital.

Assets commonly involved

◆Commercial real estate
◆Mortgages

Potential advantages

◆Liquidity (if traded)
◆Diversification

Legal and tax limitations

◆Securities regulation
◆Market risk
◆Not used for personal estate planning

Establishment & administration

◆IRS qualification tests
◆SEC or state securities compliance

Common mistakes

◆Confusing a REIT with a family real estate trust

Questions to ask a professional

◆Which state's law should govern this arrangement, and why?
◆Who should serve as trustee and successor trustee?
◆How will the trust be taxed at the federal and state level?
◆What assets must be retitled, and who handles the transfers?
◆What ongoing records, filings, and reports will be required?

Educational information only. Trust law varies by state; consult qualified legal, tax, and financial professionals before acting.

Next step

Move from understanding to a properly reviewed plan.

Discuss a Real Estate Investment Trust (REIT) With Tangier

Educational information only. Not legal, tax, or investment advice.