Skip to main content

Real Estate Investment Trust (REIT)

 

What is Real Estate Investment Trust?

Real Estate Investment Trust is a mutual funds for Real Estate. Under mutual funds underlying assets are equity and debts, similarly REIT will have the real estate as its underlying assets fetching rental incomes.

How to Incorporate:

  1. Trust should be registered under Registration Act 1908.
  2. Trust deed has its main objective as undertaking activity of REIT.
  3. Trust deed should specify the responsibilities of the Trustee.

Application to Whom:

Applicant (Trust) sends application in Form A to SEBI for registration.

  1. Application fees is Rs.1,00,000/- (Non-refundable)
  2. After getting intimation from the SEBI further non-refundable fees Rs.10,00,000/- to be paid.

Parties to the REIT:

  1. Sponsors:
    a) Sponsor should be one person but not more than 3 persons and each of the sponsors holding or proposing to hold not less than 5% of the number of units of REIT post issue basis and
    b) Net worth on collective basis not less than 100 crores, provided each sponsor should has a net worth not less than 20 crores and
    c) Should have not less than 5 years of experience in development of real estate or fund management in real estate.
  1. Manager:
    a) The Manager of REIT may be body corporate, company or LLP.
    b) Should have 5 years of experience in fund management or advisory services or property management in real estate industry.
  1. Trustee:
    Trustee should registered with SEBI and not an associate of the sponsors or manager.

Note:

  • Sponsors, Manager and Trustee should be separate entity.

How REIT function?

REIT can directly invest in Income generating commercial property or Invest through SPV.

Special Purpose Vehicle (SPV):

  • LLP or company set up by REIT and having controlling interest not less than 50% of the equity share capital or interest.
  • SPV should hold at least 80% of wealth in properties not in other SPV.
  • SPV should not engage in any other activity other than developing or holding property.
 

Structure of REIT:

Structure of REIT in India

How REIT raise funds:

  1. REIT raise fund from any investors either in India or foreign.
  2. Investors has to invest at least Rs.2,00,000/- Minimum unit size should be Rs.1,00,000/- i.e. investors should hold at least two units.
  3. There should at least 200 investors for a REIT.

Conditions for REIT:

Not less than 75% revenue of REIT should be from rental income, leasing and letting of real estate assets, other than Capital gains on disposal of properties.

Income of REIT:

  1. Rental income from direct investment in real estate properties.
  2. Capital gain from sale of real estate properties.
  3. Dividend income from SPV.
  4. Interest income from loan advanced to SPV.

REIT Investment Condition:

Not more than 20% of REIT assets in

  1. Developmental properties (Property held by REIT not less than 3 years and leased out)
  2. Listed and unlisted debt of companies.
  3. Equity shares of company not less than 75% of its activities from real estate field.
  4. Government securities.

Not less than 80% of the Value of REIT assets should be invested in completed revenue generating properties.

Note:

The Investment by a REIT shall only be in SPVs or Properties or securities in India other than Vacant land or Agricultural land or mortgages.

Taxability in the Hands of REIT:

Under section 115 UA distributed income of REIT to be taxed in the hands of investors in the same nature as in hands of REIT.

  1. Interest income fully exempt under section 10(23FC).
  2. Long term capital gain taxable @ 20% short term gain @15%
  3. Other income taxable at 30%.
  4. Dividend received by REIT from SPV is exempt provided SPV should pay DDT.

Taxability in the hands of Investors:

  1. Interest Income received from REIT is fully taxable.
  2. Any Other income is fully exempt.

Initial Public offer condition:

  1. REIT registered under SEBI.
  2. Value of assets hold by REIT not less than 500 Crores.
  3. Units proposed to be offered to public not less than 25% of the total outstanding units of REIT and offered only by offer document.
  4. Offer size is not less than 250 crores.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Good Returns by Investing in ELSS Mutual Funds Online

Invest in Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...
Read more

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...
Read more

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...
Read more

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Read more

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now