REITs (Real Estate Investment Trusts) must pay out at least 90% of taxable income as dividends, making them attractive income investments. This calculator estimates annual dividend income, total return over your holding period, and after-tax income so you can compare REITs to other income-producing investments.
REIT Investment Details
REIT dividends taxed as ordinary income (20% 199A deduction may apply)
Year-by-Year REIT Returns
| Year | Portfolio Value | Dividend Income | After-Tax Dividend | Cumulative Return |
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How to Use the REIT Investment Calculator
REITs offer a way to invest in real estate without buying physical properties. This calculator helps you estimate the income and total return from a REIT investment, including the tax impact of REIT dividends.
Step 1: Enter Investment Amount and Yield
Enter how much you plan to invest and the REIT's current annual dividend yield. You can find the dividend yield on financial sites like Yahoo Finance or the REIT's investor relations page. Common broad REIT ETFs like VNQ yield around 3–5%, while individual REITs can yield 5–8% or more.
Step 2: Set Price Appreciation and Holding Period
Estimate the annual price appreciation you expect. Equity REITs have historically appreciated around 3–6% annually on top of dividends. Mortgage REITs (mREITs) typically have lower price appreciation. For a conservative estimate, use 2–3% appreciation; for a more optimistic scenario, try 5–6%.
Step 3: Enter Your Tax Rate
REIT dividends are typically taxed as ordinary income, not at the lower qualified dividend rate. If your marginal tax rate is 24%, enter 24%. Note that Section 199A provides a 20% deduction on REIT dividends, which effectively reduces the tax to 19.2% for someone in the 24% bracket — but this calculator uses your stated rate for simplicity; consult a tax advisor for your exact situation.
Reinvesting vs. Taking Income
If you select "Reinvest (DRIP)," dividends are added back to the investment base, compounding your returns over time. If you select "No," dividends are counted as spendable income each year and not reinvested. The DRIP option typically produces significantly higher final portfolio values but lower annual cash income available to spend.
FAQ
Is this REIT calculator free?
Yes, completely free with no signup required. All calculations run in your browser.
Is my data private?
Absolutely. Everything runs client-side in your browser. No data is transmitted or stored.
What is a REIT and how does it generate income?
A Real Estate Investment Trust (REIT) is a company that owns income-producing real estate. REITs are required by law to distribute at least 90% of taxable income as dividends to shareholders, making them popular income investments. They trade like stocks and pay dividends — often quarterly. Common REIT types include retail, office, residential, industrial, and healthcare.
How are REIT dividends taxed?
Most REIT dividends are taxed as ordinary income (not qualified dividends), meaning they are taxed at your marginal income tax rate rather than the lower 15–20% qualified dividend rate. However, under the Tax Cuts and Jobs Act, you can deduct up to 20% of REIT dividend income via the pass-through deduction (Section 199A), which effectively lowers your tax rate on REIT income.
What is a good dividend yield for a REIT?
REIT dividend yields typically range from 3% to 8%, though some specialized REITs yield higher. A 'good' yield depends on your goals and risk tolerance. Higher yields can indicate higher risk (distressed properties or debt), while lower yields often come from higher-quality growth-oriented REITs. The 10-year average yield for major REIT ETFs like VNQ has historically been around 3–5%.
What is price appreciation in REITs?
REIT total return includes both dividend income and price appreciation (or depreciation) of the REIT's share price over time. Historically, equity REITs have delivered total returns averaging around 10–12% annually over long periods, combining dividend yield and price appreciation. However, individual REITs and sectors can vary significantly.