A REIT must distribute at least 90% of its taxable income to shareholders to avoid taxation at the entity level. The SIE tests that threshold, the difference between equity and mortgage REITs, and the sharp contrast in liquidity between exchange-listed and non-traded REITs.
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A REIT must distribute at least 90% of its taxable income to shareholders annually to qualify for pass-through treatment and avoid corporate income tax on the distributed amount.
REIT categories can differ by registration status, investor access, and whether the shares are listed and traded on an exchange.
Equity REITs generally own or operate income-producing real estate, while mortgage REITs focus on mortgages or mortgage-related assets.
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