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REIT – Real Estate Investment Trust

Recently, the investment term "REITs" come across my mind. I keep seeing news about REITs in newspaper, forums and personal blogs. A REIT or real estate investment trust is a real estate company that offers common shares to the public.

What is REIT? According to Wikipedia:

A Real Estate Investment Trust or REIT (pronounced /ˈriːt/) is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks.

In Malaysia, REIT is a little bit different (source).

• 1. Investors' dividends will be taxed at investors' books.
• 2. Non-residents' dividends will be taxed at 28%. It is an upfront and final withholding tax.
• 3. There are NO explicit requirement of minimum payout ratio in the guidelines.