IMO, REITs are a great way to invest in real-estate, all else aside.
Agree with you and yes, I am researching via other venues.
investinreits.com is a great resource for anyone interested.
The message may be confusing in that I said the capital gain is non-qualified. That is obviously incorrect as PCL's capital gain distribution is classified into different portions subject to the differing capital gains tax rates.
I meant that on some dividend distributions from REITs, non-qualifiying dividends are treated as ordinary income.
Thanks, winandlose, that confirms what I thought. B/c I have lots of both ST and LT carry forward losses from the crash days, it effectively makes the PCL divis to me tax free. Very nice, esp when compared to other REIT divis that are taxed as ordinary income (not at the new 15% max. stock dividend rate). And I'm not concerned with the reduction in basis, I'll hold and defer ad infinitum any LT gap gain. Thanks again.
Most people become attracted to REITs based on the before tax return/yield number without realizing that some of that may be return of capital. As I posted before, you also have a capital gain component that is non-qualifed (i.e. does not generally qualify for lower tax rate treatment)and even the dividend is not subject to the lower tax treatment. The reason is that the intent of lower tax treatment was that the dividends had already been taxed at the Corporate level which doesn't happen with REITs.
As for your selection of REITs in a retirement account, it's all tax deferred so look for investments that are capable of generating more capital gains/"cleaner/truer" dividends.
The thinking is that REITs become less attractive as interest rates rise because they are other safer/cleaner yielding instruments that they compete against.
The other issue is that a "crash" may be the result of underlying poor economic conditions that may also significantly impact the REIT operations.
Just my simple thoughts and all IMHO, of course. Hopefully, you're looking at various sources of information and should also talk to/use retirment planning resources if available.
REIT based mutual funds?
We just converted our retirement plan and have Delaware VIP REIT available as a choice.
I'd like to park my conservative money there rather than in the MM or in a bond fund, but wondered if there was an accounting nightmare that would come along with this move.
Also, as most of the "market rules" have been broken in the last 5 years, my thought is that when we see another "crash" like we did a few years back, that REITs will hold up as safe money bets even if interest rates start to rise?
Would appreciate any and all thoughts. Thank you.
As you may know, the short-term capital loss carryover is applied/used first as it offsets short-term gains in the next tax period and then can be used to offset up to $3,000 of ordinary income.
Long-term capital losses must be used against all capital gains first before any can be used to offset up to $3,000 of ordinary income.
Hope that makes sense so the long-winded answer is short-term losses would be more advantageous to use as an immediate offset to short-term gains, then ordinary income but yes, you can use your long-term loss carryover to offset the capital gain distribution.
Also, note that any return of capital is not reported as income but is used to reduce your stock basis. If you hold long enough and a continued return of capital happens to drive your basis past zero then the excess "return of capital" is then reported as a long-term capital gain. In other words, apply or apportion some as a reduction of basis up to zero and the excess would become long-term capital gain.
A really good site to search for tax stuff is
At least mine was for last year, Cap G&L was one of H&R Blocks last questions they asked me afetr all income was considered. So until I do this years txs, I don't see any changes to that, $3,000 carryover is net! (I know cause I lost a
I think it's unlikely that there will be a dividend increase. In fact, if you look at the cash flow numbers from the latest press release and the 4 quarters before that, you'll see that dividends paid out plus capital expenditures (new purchases of timberlands) added up to more than the cash from operations in 4 of the last 5 quarters. If they don't start making more money soon, they will either have to cut back on new purchases - not good if they're also selling off land as part of their earnings - or actually cut the dividend. I started looking at this as in income investment, but I'm thinking now that I want something where the payout ratio is lower and the dividend safer.
<<<< If they don't start making more money soon, they will either have to cut back on new purchases - not good if they're also selling off land as part of their earnings - or >>>At the cc. they said they planned to continue to sell off "value added" land for development and "non-strategic" timberland, using the $$$s to buy additional "core" timberland, buy back stock, pay down debt and support the dividend. I believe the dividend is "safe" but probably won't be increased until '05 or '06.