WealthREIT — Real Estate Investment Trust
How it works
REITs must distribute most of their rental income to holders, making them a source of regular income. You can hold them individually or through a diversified REIT ETF.
Taxation in Canada
Note: REIT distributions are not eligible dividends. They often mix income, return of capital and capital gains, and are generally taxed more heavily in a non-registered account. REITs are therefore often best held in a TFSA or RRSP.
Frequently asked questions
Does a REIT pay dividends?
It pays distributions, but these usually aren't eligible dividends. The tax treatment is different and often less favourable.
Where should I hold a REIT?
Often in a TFSA or RRSP, since distributions are taxed heavily in a non-registered account.
REIT or direct real estate?
A REIT offers liquidity, diversification and no maintenance, but no mortgage leverage or direct control.
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