A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments without buying, managing, or financing any properties themselves.
To qualify as a REIT, companies must comply with certain provisions of the Internal Revenue Code (IRC). A full list of requirements is available through the link, and some include:
- Required to pay a minimum of 90% of taxable income in the form of shareholder dividends each year
- Have at least 100 shareholders after the first year of existence
- Have no more than 50% of its shares held by 5 or fewer individuals
- Be an entity that’s taxable as a corporation
NOTE: Vacation rentals are considered ‘active’ income and, therefore, not REIT eligible. Please see your tax advisor for specific investment advice.
Is Arrived qualified as a REIT?
Arrived intends for each individual long-term rental home series to elect and qualify to be taxed as a separate real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ending after the completion of the initial offering of interests of each such series.