REIT Qualification Tester

Tests a company against the core REIT qualification rules, the 75 percent asset test, the 75 and 95 percent income tests, the 90 percent distribution requirement, the 100-shareholder minimum, and the 5/50 ownership rule. Inputs are the company’s asset and income percentages, distribution rate, shareholder count, and concentrated ownership share.

Interactive Tool

Company profile

Assets in RE / cash / govt

Income from RE sources

Income from RE + passive

Taxable income distributed

Number of shareholders

Owned by 5 or fewer individuals

75% asset test

Real estate, cash & government securities

90% / ≥ 75%

75% income test

Rents, mortgage interest, RE gains

85% / ≥ 75%

95% income test

75%-test sources + dividends & interest

96% / ≥ 95%

90% distribution

Of REIT taxable income (ex. net cap gain)

90% / ≥ 90%

100-shareholder test

Minimum number of shareholders

150 / ≥ 100

5/50 rule

5 or fewer individuals owning shares

40% / ≤ 50%

Overall

Qualifies as a REIT

Distributing ≥90% of taxable income lets the REIT take a dividends-paid deduction and avoid most entity-level federal tax.

Learn the concept

This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

Open Real Estate Finance

Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.