Skip to Content

Why planners should reconsider REITs for HNW clients

August 20, 2018 Article 2 minute read
Authors:
Brian Schultz Wealth Management
Real estate investment trusts have historically provided a meaningful level of current income but in a relatively tax-inefficient manner. The Tax Cuts and Jobs Act contains new tax breaks for certain REITs that may make them more attractive to investors. Read more at FinancialPlanning.

Image of a man looking out of large office windows, onto a misty city morning.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.

Related Thinking

Two financial advisors talking about alternative investments.
May 25, 2023

Alternative investments: Accessing opportunities for private wealth

Article 4 min read
Grandparent teaching their grandchild about finances.
May 19, 2023

Kids and finances: Activities and conversations for any age

Article 5 min read
Professional trustee advising a young couple.
April 19, 2023

Working with a professional trustee: Six myths busted

Article 5 min read