{"id":1316,"date":"2024-09-21T09:03:16","date_gmt":"2024-09-21T09:03:16","guid":{"rendered":"https:\/\/bfccapital.com\/blog\/?p=1316"},"modified":"2024-09-21T09:03:16","modified_gmt":"2024-09-21T09:03:16","slug":"what-is-equity-reits-ereits","status":"publish","type":"post","link":"https:\/\/bfccapital.com\/blog\/what-is-equity-reits-ereits\/","title":{"rendered":"What is Equity REITs (eREITs)?"},"content":{"rendered":"

\"Equity<\/p>\n

Investment has always been an approachable concept for people to smoothen their family\u2019s future. It helps one accumulate some amount for rainy days or accomplish those dreams that were planned goals one day. There are multiple investment options available in the market. Each option seems to be better than the previous one for a novice. Hence, proper guidance is essential in such situations to understand the better investment stream as per the requirements and financial status of an individual. It is similar to segregating jobs from the ocean of job opportunities for a fresher as per their field of study and calibre.\u00a0<\/span><\/p>\n

Defining Equity REITs<\/b><\/span><\/h2>\n

Equity REITs are defined as companies that own and manage properties that generate income, such as shopping complexes, residential apartments, and office buildings. When the expenses of operating such properties are deducted from the final profits, approx 90% of the remaining taxable amount is disseminated to the unit holders in the form of dividends. Equity REITs also generate income by selling various properties.\u00a0<\/span><\/p>\n

The term Equity REITs can also be defined as a company allowing their investors to earn a share of income through commercial real estate ownership without buying or managing the properties themselves. The form of investment is one of the consistent income streams for investors, attracting more investment each day.\u00a0<\/span><\/p>\n

Mentioned below are the four listed REITs in India:\u00a0<\/span><\/p>\n

\"Equity<\/span><\/p>\n

What are the Profits of Investing in REITs?<\/b><\/span><\/h2>\n

Let us have a glimpse of some of the profitable aspects of investing in Equity REITs:<\/span><\/p>\n

Income in the Form of Dividends –<\/b>\u00a0After deducting the property handling charges, the remaining amount is distributed among the shareholders in the form of dividends. Hence, investors seeking a stable and long-term are advised to opt for REIT.\u00a0<\/span><\/span><\/p>\n

Diversified Portfolio –<\/b>\u00a0Another advantage of investing in REITs is diversification in the portfolio. It helps to gain the trust of investors and improve the clientele base. Diversification helps to maintain the balance of the portfolio. Hence, investors can observe a balance of profits and losses in the portfolio rather than a superficial strike or an extreme dip in profits.\u00a0<\/span><\/span><\/p>\n

Transparent Investment Option –<\/b>\u00a0The listed equity REITs help investors keep track of their investments, making the whole procedure more transparent and reliable. It helps to make the investors stay relaxed and trust the whole process. The listed REIT companies make real estate investing more reliable and liquid. Real-time pricing and valuations help REIT companies provide market transparency for investors for a barrier-free procedure. The financial industry is monitored by analysts, investors, and the financial media. Hence, the options for transparency and liquidity are enhanced further.\u00a0<\/span><\/span><\/p>\n

High Liquidity- <\/b>Another advantage of REIT investing is the platform’s high liquidity. Usually, REITs are publicly traded, which eases the process of buying and selling properties. Hence, the higher liquid profile attracts more investors to be a part of the investment option.\u00a0<\/span><\/span><\/p>\n

Drawbacks of Investing in Equity REITs<\/b><\/span><\/h3>\n

We all are well acquainted with the fact that the grass is always greener on the other side; in the same way, a concept is never 100% right or the best always. Let us have a look at some of the possible risk factors of which an investor should be aware before delving deep into the concept:<\/span><\/p>\n

Escaped Tax Benefits – <\/b>Every individual’s prime concern is searching for methods to save tax smartly and ethically. However, when investing in REITs, one may face disappointment. The investors receive dividends or capital gains from the REITs. These are taxable payments. Capital gains are taxable at short\u2014or long-term rates. Hence, it might be disappointing for people who wish to escape from the taxation point of this concern.\u00a0\u00a0\u00a0<\/span><\/span><\/p>\n

Mentioned below is the taxation table followed for tax payment on dividend income:<\/span><\/p>\n

TAXATION RULES<\/b>
\n<\/b>There are different tax laws for dividend income and capital gains when it comes to investors’ income from REITs. Moreover, there are differences in the tax treatment of assets redeemed through an International REITs Fund of Fund. The following summarizes the relevant tax laws:<\/span><\/span><\/p>\n