Factfile: REIT - Real Estate Investment Trust Real Estate Investment Trust

Lump sum investments: Yes

Regular premiums allowed: Yes

Flexible payments allowed (stop/start/additional/increase/decrease): Yes

Investment Risk Profiles Available:

Changing funds and risk profile allowed: No

Moving to another company allowed: No

Life Insurance Included: No

Personal Tax Benefits:

  • REIT fund grows free of taxes
  • Capital gains tax free only up to yearly allowance
  • 22% income tax (witholding tax) at source - can be reclaimed by non tax payers
  • Basic rate tax payer has no further liability to income taxes
  • High rate tax payer subject to 18% marginal tax in addition
  • ISA or pension and companies can invest in REIT capital gains tax free and no witholding tax

Can be held inside Trust: Yes

Suitable for:

  • Children
  • Adults
  • Business
  • Trusts
  • Charities
  • Pension Fund Investment
  • Non Tax Payers
  • Basic Rate Tax Payers
  • High Rate Taxpayers - but limit amounts in view of taxes

Insolvency Compensation Limits:

Investment Company - Maximum compensation for insolvency £48,000. Do not invest more than £50,000 with any one company.

Brief Description:

Investing in Real Estate Investment Trusts REIT allows you to invest in commercial property with other people wishing to do the same without the need personally or physically to invest in bricks and mortar. Real Estate Investment Trusts REIT are public limited companies and issue a fixed number of shares.   You then buy shares in the company.  This is why, unlike Unit Trusts and OEICs, they are classed as 'closed ended'.  Share prices can obviously fall as well as rise.

Provided certain conditions are met such as:

  • REIT must hold three properties - none owner occupied
  • Not more than one property worth 40% or more of fund
  • 75% of profits must be generated from rental income
  • 90% of profits must be paid out to shareholders

The fund then grows tax free on its rental income business.

for help with your REIT contact us today.


Income Taxes:

Income Tax and Rental Income

Rental income received into a REIT is tax free provided it meets the REIT qualifying rules.  Any dividend income paid out by the REIT to the investor/shareholder may or may not have witholding tax applied depending upon who owns the investment. Capital gains or profits made by the REIT are not taxed.

Dividend income paid out by a REIT to the investor usually has 22% witholding tax deducted at source.

  • If you are a non taxpayer you can reclaim the 22% tax paid
  • If you are a basic rate taxpayer there will be no further tax to pay
  • If you are a higher rate taxpayer you will need to pay a further 18% through your tax assessment
  • If your pension fund or your ISA or your limited company invests in a REIT the 22% witholding tax will not be deducted

Capital Gains Tax CGT

Depending on the amount of profit you make when you sell your REIT, you may need to pay Capital Gains Tax.

When calculating your profit you are allowed to deduct the original purchase price, any expenses you incurred when buying or selling and you may be entitled to Taper Relief.

Request expert advice today about your tax position.


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