DANIEL BAINES: Reits give a foothold in property, but beware tax implications
As an investor in a Reit there are significant tax consequences you must be aware of
Real estate investment trusts (Reits) are becoming a popular investment vehicle among investors in SA looking to diversify their investments, as they give you exposure to the local property market. By buying shares in a Reit, you own shares in a company that owns and operates a real-estate portfolio. You can, therefore, obtain exposure to the South African real estate market with an investment in a Reit without having to purchase a rental property. The Reit must be listed on the JSE. For many people, investing in a Reit makes investing in real estate far more affordable, as you can buy a share instead of an entire property. It also cuts out the transaction costs of investing in fixed property, such as payment of transfer duty upon purchase and estate agent commission on sale. However, as an investor in a Reit there are quite significant tax consequences you must be aware of. Payments to shareholders of Reits are generally made through dividends. These dividends are treated different...
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