Does that go for all types of reits? I have a traditional Ira and am looking at some reits that follow timber and forestry products. I have been reading As much as possible about the taxes and saw that the dividends get deferred tax until you pay standard tax on your withdrawals in retirement, correct? But usually the articles focus on real estate specific reits, and not necessarily the diverse types. Can yu provide any clarity on this? Thank you very much in advance.
I think the only time any IRA pays any taxes is on the amount of UBTI, Unrelated Business Taxable Income, above one thousand dollars in one year. UBTI mainly occurs in partnerships, like MLPs. It very rarely happens because UBTI usually is a very small or negative figure in partnerships. Of course you pay normal income taxes when you withdraw money from a regular IRA. My wife and I are required to take minimum required distributions from our IRAs every year, even though we don't want to, because we are over 70 years old.