Tax cut may hurt appeal of REITs

The capital-gains tax cut might be a boon to owners of commercial real estate; however, investors who own stock in real estate investment trusts won’t see any break from the dividend-tax cut.

According to the Wall Street Journal, REITs were excluded from the cut because the trusts are already exempt from corporate income taxes. Investors will still pay a 38.6% tax on dividends, rather than the 15% rate applied to non-REIT dividends.

REITs have been popular during the last few years as their dividends annually outperformed those from the Standard & Poor’s 500. If the higher dividends disappear, so may the investors.

Illustration © Artville.

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