A Real Estate Investment Trust (REIT) is a financial entity that owns, operates, or finances income-producing real estate properties.
In general, a REIT is an entity that:
- Owns or finances income-producing real estate;
- Allows investors to invest in portfolios of properties through the purchase of stock;
- Qualifies as a REIT for U.S. federal income tax purposes, and is therefore generally not subject to federal corporate income taxes on its net income that is distributed, which substantially eliminates the “double taxation” treatment (i.e., taxation at both the corporate and stockholder levels) that generally results from investments in a corporation; and
- Pays distributions to investors of at least 90% of its annual REIT taxable income.