REIT is the acronym used for real-estate investment trust. Revenues gleaned from rent and other fees compose the dividends given to stockholders who have invested in property-investment corporations. REITs really seem to zig when other stocks on NASDAQ zags and in general, they correspond negatively with the stock market. In the late 1990s, REITs took quite a beating, but they have rallied and flourished in the bear market started some ten years ago.
These real estate investment trusts have been around since 1960 when they were first created by Congress to grant small investors with the chance to make investments in large properties that produced revenues. Outside of the USA, REITs are also popular in Australia, Japan and Brazil. REITs are not the only real estate investment instruments available in these countries but all are reliant on the different laws in effect in each nation.
Due to the fact that REITs offer the many direct means to buying property and circumventing expensive hassles, they are very attractive to individual real estate investors. Dividends are exempt from federal tax as long as they distribute at least 90% of taxable revenues to investors every year. Dividends can amass 8 to 9% per year and they give predictability almost unparalleled on today’s market.
The inspiration for the design of REITs was synonymous to investment structure afforded by mutual funds. Each shareholder is entitled to a prorated percentage of earnings. REIT stocks can be bought on most of the major stock exchanges. The deduction of dividends from taxable corporate revenues is permitted with REITs. Only those taxes involving dividends received and any capital gains should be reported by an individual investor.
In 2009, it was estimated that there were about 170 public REITs holding more than $300 billion US dollars. Often, these trusts concentrate on one specific type of property, such as residential or commercial. Handling the maintenance and management concerns are the focus of some REITs, but others are more detached and hire contractors to do these tasks.
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