Definition of real estate investment trusts
Real estate investment trusts:
REITs are an investment fund which invests in property. This is a more tax-efficient structure than investing in the shares of a real estate company. The problem with property companies is that the investor is hit by double taxation. The company has to pay corporation tax on its rental income and any chargeable gains, then the shareholder has to pay income tax on dividends and capital gains tax too. REITs do not pay corporation tax, so private investors can invest in commercial property and only pay tax once.
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