Question

22. Name three reasons why a REIT might be used for real estate investment:

1 ________________________________

2 ________________________________

3 _________________________________

23. Enter the normal tax lives of the following assets for tax depreciation purposes:

______ Assisted living facility building.

______ Hotel building.

______ Land.

______ Industrial building.

______ Apartment complex (building portion).

Answer 1

22. Three reasons why REIT can be used for real estate investment:

1. REIT : Real Estate Investment Trust are registered company that invests in real estate and it has the source of income through income from real estate investments only. It invests directly in real estate, finances in income producing real estates. Hence investing in REIT gives investors the advantage of diversification through REITs. The investor can invest in more than one real estate asset with limited investment.

2. REITs gives investors the benefit of investing in commercial real estate investment along with the advantages of investing in a publicly traded stock. The investment characteristics of income-producing real estate has provided REIT investors with historically competitive long-term rates of return that complement the returns from other stocks and from bonds.

3. REITs reliable income ia derived from rents paid to the owners of commercial properties whose tenants often sign leases for long periods of time, or from interest payments from the financing of those properties.

23. Normal Tax lives of the following assets as per US tax code:

• Assisted living facility building.: Comes under residential and hence 27.5 years

• Hotel building: It comes under commercial properties, hence its tax life is 39 years.

• Land.: Can come under residential and commercial, hence it can be 27.5 years or 39 years depending on the case.

• Industrial building.: Comes under Commercial property and hence 39 years

• Apartment complex (building portion): 27.5 years for residential properties as per US tax code.