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REIT Tax Calculator

2025
REIT Distribution Details
$

Distribution Breakdown (%)

$
REIT Tax Summary

Total Tax

$2,678

Effective Rate

22.31%

After-Tax Income

$9,322

Section 199A Deduction

$1,440

Tax Breakdown
Total Distribution$12,000
Ordinary Dividends$7,200
Qualified Dividends$1,200
Capital Gain Distributions$2,400
Return of Capital$1,200
Section 199A Deduction-$1,440
Tax on Ordinary Dividends$1,267
Tax on Qualified Dividends$180
Tax on Capital Gains$360
Total Tax$2,678
After-Tax Income$9,322
More Information
Understanding REIT Taxes

What is the Section 199A deduction for REITs?

Section 199A lets you deduct up to 20% of the ordinary dividends you get from a REIT. This means you only pay tax on 80% of those dividends. It was introduced by the Tax Cuts and Jobs Act in 2017 and applies to most REIT investors, regardless of income level. The deduction does not apply to qualified dividends or capital gain distributions.

How are REIT dividends taxed?

REIT dividends are split into several types, each taxed differently. Ordinary dividends are taxed at your normal income tax rate (after the 199A deduction). Qualified dividends are taxed at the lower capital gains rate (0%, 15%, or 20%). Capital gain distributions are also taxed at long-term capital gains rates. Return of capital is not taxed right away — it reduces your cost basis instead.

What is return of capital?

Return of capital is the portion of a REIT distribution that is not considered taxable income. Instead of being taxed now, it reduces the cost basis of your shares. This means you will pay more capital gains tax when you eventually sell the shares. Think of it as the REIT giving you back some of your original investment rather than earnings.

Note: This calculator provides estimates based on federal tax rules. State taxes, the Net Investment Income Tax (NIIT), and your full tax situation may change the result. Speak to a tax professional for advice specific to your case.

Disclaimer: This calculator provides estimates based on current IRS rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your filing status, state of residence, deductions, and individual circumstances. Always consult a qualified tax professional or CPA before making financial decisions. Read our terms

Sources & References
2025

This calculator uses official rates and thresholds from:

Last verified: March 2026 · Tax year 2025. Results are indicative — consult a qualified accountant for personalised advice.

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