property
real estate investment trust
A real estate investment trust (REIT) is a company or trust that owns, operates, or finances income-producing real estate and sells shares to investors. If it meets federal requirements, such as distributing most of its taxable income to shareholders, it generally avoids corporate-level income tax. REITs let small investors pool money to own large properties like shopping centers, apartments, and offices. Equity REITs own property; mortgage REITs hold real estate loans.
- Exam tip
- Exams test the pass-through tax advantage and the requirement to distribute most income. Know equity versus mortgage versus hybrid REITs.
- Example
- An investor buys $5,000 of shares in a REIT that owns 40 apartment complexes and receives quarterly dividends from the rental income.
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Last verified: 2026-10-23