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One of the stocks I own is considering changing into an REIT. The company normally does government consulting and construction. Any thoughts on the pros/cons of it?

I know that this decreases their tax rate, but what else?

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    Could you please tell us what country this company is located in? The laws and taxes they'll be subject to as a REIT vary accordingly. Commented Aug 9, 2012 at 12:38
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    are you a employee, investor, adviser, customer? Commented Aug 9, 2012 at 13:10
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    How is it a personal finance question?
    – littleadv
    Commented Aug 9, 2012 at 17:36
  • this is an personal finance question because i own stock in it locatd in the US and i am investor Commented Aug 9, 2012 at 20:17

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It decreases their tax rate, but will have two major consequences for you:

  1. Your dividend yield may go up. REITs are required (in the U.S.) to distribute 90% of their taxable income back to their investors in exchange for their favorable tax status, so REITS often have fairly substantial dividends, even for growth companies.
  2. The taxes you pay on those dividends may be taxed as a number of different things, including ordinary income, depending on how the money that is being distributed comes about.

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