Real Estate Investment Trusts (REITS)

Introduction

Real Estate Investment Trusts (REITS pronounced "reets") are tax efficient funds structured as investment trusts that invest in real estate or property. As quoted companies, REITs do not pay Capital Gains Tax or tax on rental income received from the properties held in the fund.

Real Estate Investment Trusts (REITs) became available in the UK from 1 January 2007 but were operating globally in 20 countries before then. The tax-specific origins of REITS can be traced back to the USA as far back as the 1880s. It was also here that they really started to take off 100 years later in the 1980s. Currently, REITS are most popular in Japan, Australia and the Netherlands.

REITs are funds that invest in real estate, the collective American term for commercial, residential and retail property. They use investors' assets to buy properties which, in turn, are then let out to companies and individuals. REITs are structured as investment trusts and therefore amount to a quoted company. This means they can issue shares which will be traded on the stock market.

How you can avoid tax entirely on your REIT Next : How you can avoid tax entirely on your REIT

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