Real estate investment trusts
Real estate investment trusts are the tax designation source for a corporation investment in real estate. It also helps in reducing or eliminating the corporate income taxes. Investment taxes are required in distributing about 90% of the total income. This amount could also become taxable in the hands of the investors. The entire structure was designed for providing a similar structure for making good investment in real estate as mutual funds provide for investment in stocks. Like many other corporations real estate investment trusts can be held both publicly or privately. Many of the public real estate investment trusts are listed on the public stock exchanges like shares of common stock in other firms.
Most of the Real estate investment trusts are classified as equity, mortgage or hybrid. The key method to look into the Real estate investment trusts are its AFFO (Adjusted Funds from Operations) NAV (Net Asset Value), and CAD (Cash Available for Distribution). The investment trust has been differently launched in many countries and cities of world. In Australia the Real estate investment trusts was launched in Australia in the year 1971. In the Australian stock exchange are known as Listed Property Trusts (LPTs), distinguishing them from private REITs which are known in Australia as Unlisted Property Trusts. At present there are more than 60 LPTs listed on the ASX, with market capitalisation in excess of a$100bn.
In Bulgaria Real estate investment trusts were introduced in Bulgaria in the year 2003 with "Special Purpose Investment Companies Act". In Canada the Real estate investment trusts was established in the year 1993 with the purpose of configuring the trusts that are not levied. The investment trusts have been expelled from the income trust tax legislation proposed in the 2007 budget by the Conservative government. Many Canadian REITs have limited liability.
Certain qualifications are required in the Real estate investment trusts including the following:
At least 75% of the G-REIT's gross revenues must be real-estate related.
REITs will have to be established as a corporation "REIT-AG" or "REIT-Aktiengesellschaft".
At least 75% of its assets have to be invested in real-estate.
The corporation is income-tax-exempt, but the shareholders will have to pay individual income tax on the dividends.
At least 90% of the REIT's taxable income has to be distributed to its shareholders through dividends.
There are Real estate investment trusts in Germany also. The country is also planning to introduce the German REITs for creating a new real estate type; the investment vehicle. In Hong Kong the Real estate investment trusts was established in 2005. In India the setting up of investment trust is till in process which means that India is trying to introduce some definitive legislation for the introduction and smooth functioning of REITs. Japan is one another Asian country with Real estate investment trusts. The establishment of REIT was permitted here in December 2001. Commonly referred to as S-REITs. There are currently 20 REITs listed on the SGX. Benefit from tax advantaged status.