What are Section 199A Dividends?

Section 199A dividends refer to dividends paid out by real estate investment trusts (REITs) or funds holding REITs. Similar to regular dividends, Section 199A dividends take some amount of capital from a company’s equity and redistribute it to shareholders based on the number of shares they possess. 199A dividends, however, are only paid out by REITs and funds holding REITs, and therefore receive special treatment in the world of tax law.

Investors Can Deduct Up to 20% of REIT Income. Meaning: Investors could now deduct up to 20% off any income obtained from dividends paid by real estate investment trusts (REITs). The same deduction applies to dividends obtained from mutual funds, if a meaningful amount of the fund’s income came from dividends distributed by REITs. Any dividends eligible for this deduction are colloquially referred to as Section 199A dividends.

Source: Dividend Investor

Related Articles:

- How To Be a Better Investor During Difficult Times

- The Secret Ingredient of Dividend Growth Stocks

- You Can't Spend Earnings

- Stocks That Have Paid Uninterrupted Dividends Since 1895

- The Magnificent Marvelous Money Machine