Real estate investment trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.

Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.

In Vermont, as in other states, Real Estate Investment Trusts (REITs) are governed by federal tax law, specifically by the Internal Revenue Code (IRC). REITs must comply with certain IRS requirements to qualify as a REIT, such as investing at least 75% of total assets in real estate and deriving at least 75% of gross income from rents or mortgage interest. The benefit of qualifying as a REIT is that the company is allowed to deduct dividends paid to its shareholders from its corporate taxable income, thus avoiding double taxation. Vermont does not have specific statutes that uniquely regulate REITs; they are primarily subject to the same state laws that govern other types of business entities, such as corporations or partnerships, regarding registration, operation, and taxation at the state level. However, Vermont state tax law does conform to federal tax law in recognizing the special tax treatment of REITs. Investors in Vermont can invest in REITs to own a share of income-producing real estate, which can provide a source of regular income and potential for capital appreciation.