In recent years, financial planners have often recommended high-net-worth clients own real estate investment trusts in tax-advantaged retirement accounts.
That’s because dividends from these high-yielding investments did not qualify for the lower long-term capital gains tax rate that’s allowed for most other equities. Instead, dividends from REITs have been taxed as ordinary income, which meant paying taxes on them at an investor’s highest marginal rate, which can run close to 40% for high-income clients.
