Real Estate Investment Trust

About Real Estate Investment Trust:

A Real Estate Investment Trust (REIT) is a real estate mutual fund, allowed by income tax laws to avoid the corporate income tax. See Real Estate Investment Trust and Real Estate Investment Trust. A REIT sells shares of ownership. It must invest in real estate or mortgages and meet certain other requirements, including minimum number of shareholders, widely dispersed ownership, and asset and income tests. If it distributes 95% of its income to shareholders, it is not taxed on that income, but shareholders must include their shares of the REIT's income in their personal tax returns. A REIT's unique feature is to allow small investors to participate, without double taxation, in large real estate ventures. The trust is not subject to corporate income tax as long as it complies with the tax requirements for a REIT. Former IRC (check if this IRC provision is current here) §856.

See also the entries Income Tax and State Income Tax in the American Encyclopedia of Law.