International REITs

Investors who invest their IRA in money markets do so mostly for the consistent income they will make in interest payments.  They are paid at regular intervals without many surprises.  The biggest risk is that the prime Interest rate will fall which will in turn trim money market income. readers can boost their yields and keep the same consistent income by considering Real Estate Investment Trusts (REIT).  REITs are pretty well known here in the US but not much attention is paid to International REITs.

 International Real Estate Investment Trust

 International Real Estate Investment Trust, or REIT, is a tax designation for international corporations who invest in real estate in order to help eliminate or reduce corporate income taxes. REITs are required to distribute more than 90 percent of the income, which is taxable the moment it is distributed to the investor. The REIT structure was designed so as to provide investment opportunities to investors who are more interested in investing in real estate than in mutual funds or stock markets.

Like other corporations, REITs can be held either privately or publicly. Public Real Estate Investment Trusts can be listed on the stock exchanges. There are three basic forms of REITs. These are classified as hybrid, mortgage and equity. readers should know the important statistics in REITs are CAD (Cash Available for Distribution), AFFO (Adjusted Funds From Operations) and NAV (Net Asset Value).

International Real Estate Investment Trust In Other Nations

The concept for Real Estate Investment Trust was established in 1971 in Australia. The first listed property trust on the Stock Exchanges of Australia was the General Property Trust. Sixteen years later, the Australian Real Estate Investment Trust merged to form the ASX, or the Australian Stock Exchange. When these Real Estate Investment Trusts are listed on the exchange, they are known as LPTs, or Listed Property Trusts. This is the major difference from the private REITs that are known as Unlisted Property Trusts in Australia. Currently, the Australian Stock Exchange has more than 60 LPTs with a combined market capitalization of $Australian100 billion

Outside the United States, Australia is receiving increased recognition as the largest REIT market in the world. In fact, the ASX currently holds more than 12 percent of the global listed property trusts.

REIT in the United States

 International Real Estate Investment Trust in America normally pays little federal income tax. However, they are subject to numerous special requirements listed in the Internal Revenue Code. One such requirement is to embark on an annual distribution of at least 90 percent of the taxable income, by way of dividends to the shareholders.

 For corporations to gain the benefits of being a pass-through organization for the corporate income tax for the United States, the Real Estate Investment Tax needs to be structured as an association, trust or corporation. It must be managed by a board of trustees or directors, and need not be an insurance company or a financial institution.

Currently, most international REITs disburse all of their current savings, or even, in some cases, more than their current savings, which often results in dividends similar to bond yields.

In cases where the investment firm disburses more than the taxable income, the excess distribution is considered to be some sort of “return of capital” for the facilitation of tax collection.