Real Estate Investment Trust Shares (REITs)

Definition

REIT shares are ownership interests in a real estate investment trust, a federal tax classification for an entity that elects the status, is beneficially owned by 100 or more persons, and earns most of its income from and holds most of its assets in real estate; a qualifying REIT deducts dividends it pays, so its income is taxed mainly to shareholders.^[1] Shares may be publicly traded or sold privately, and are securities under federal law.^[2]

Federal law

1. Act of Sept. 14, 1960 (real estate investment trust provisions), Pub. L. 86-779, § 10, 74 Stat. 998, 1003. Created the real estate investment trust provisions (26 U.S.C. §§ 856-858), including the 100-person ownership, election, income and asset tests, and the dividends-paid treatment. Official text: govinfo.gov, U.S. Government Publishing Office.
2. Securities Act of 1933, Act of May 27, 1933, ch. 38, title I, § 2(1), 48 Stat. 74. Securities Act of 1933 § 2(1) (now § 2(a)(1)): defines 'security' to include stock, transferable shares and certificates of interest. Official text: govinfo.gov, U.S. Government Publishing Office.