REITs

moneylover

Am thinking of investing in a new REIT tipped by Investors Chronicle (Target Healthcare). Do REITs pay dividends in the normal way ie 10% taken off before you get the dividend? This one definitely talks about 'dividends' not income
http://www.targethealthcarereit.co.uk/
thank you

grey_gym_sock

20% tax is usually deducted, but your ISA provider will then claim it back. or they might arrange to receive it gross in the first place.

xylophone

http://www.out-law.com/en/topics/tax/property-tax-/tax-treatment-of-reits/
http://www.hmrc.gov.uk/manuals/saimmanual/saim5330.htm

moneylover

grey_gym_sock wrote: »

20% tax is usually deducted, but your ISA provider will then claim it back. or they might arrange to receive it gross in the first place.

So, just to be clear, although they call it a 'dividend' on a share all the way through the prospectus it is actually classed as income and this is becuase its a REIT?
Its just that I dont want to put it in my ISA unnecessarily being only a basic rate taxpayer and being charged 1/2percent on anything in my ISA

Whoops! Just read xylophone's post! So looks as though def best to put this in ISA- is that right? Funny time to bring to market really when lots of peoples ISA full up for the year - min investment is £10000 have just discovered so think I will have to wait for first day of trading as thats too much

akonlki231

it just read as though def best to put this in ISA is that right .it have just discovered so think i will have to wait for first day of trading this is a too much.

grey_gym_sock

yes, there is a tax saving for a basic-rate payer by putting a REIT in an ISA.

however, note that REITs can pay both property income dividends (PIDs), on which there is the tax saving, and ordinary dividends, on which there isn't. or they can pay a mixture.

gadgetmind

Yes, REITs pay out as divis and PIDs so are best in an ISA or SIPP.

My wife holds some unwrapped but she doesn't use her personal allowance so we claim back tax via SA.