Captive Real Estate Investment Trust


DEFINITION of 'Captive Real Estate Investment Trust'

A real estate investment trust (REIT) that is controlled by a single company or investor and set up to own the real estate assets of the parent company for tax purposes. This tax mitigation strategy is generally used by large retailers and banks that have many storefronts or branches in numerous locations. There are two types of captive REITs: rental REITs, which are typically used by multi-state retailers, and mortgage REITs, which are used by large banks.

BREAKING DOWN 'Captive Real Estate Investment Trust'

Captive REITs are an attempt to capitalize on the favorable tax treatment given to REITs. Rent for individual stores or branches is paid to the captive REIT by the parent company, which deducts them as a business expense, thereby reducing its taxable income. Another potential tax benefit for the parent company is through the dividends paid deduction (DPD) on dividends received from the captive REIT.

  1. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  2. Finite-Life REIT - FREIT

    A real estate investment trust (REIT) that aims to sell its real ...

    Exchange-traded funds that invest the majority of assets in equity ...
  4. Double Taxing

    A tax law that causes the same earnings to be subjected to taxation ...
  5. Dividends Received Deduction - ...

    A tax deduction received by a corporation on the dividends paid ...
  6. Horizontal Line

    A line that appears to proceed from left to right, or parallel ...
Related Articles
  1. Taxes

    The Basics Of REIT Taxation

    The unique tax advantages offered by these investments can translate into superior yields.
  2. Home & Auto

    How To Analyze Real Estate Investment Trusts

    REITs are much like dividend-paying companies, but analyzing them requires consideration of the accounting treatment of property.
  3. Home & Auto

    5 Types Of REITs And How To Invest In Them

    Real estate investment trusts are a sound addition to a diversified portfolio. Learn what you need to know to invest.
  4. Options & Futures

    The REIT Way

    Ever considered investing in real estate? Read about the REIT and see if it's the investment for you.
  5. Bonds & Fixed Income

    The Impact Of Interest Rates On Real Estate Investment Trusts

    REITs are high-yield investments, but do they have an inverse relationship with interest rates? Find out here.
  6. Investing

    How to Take Maternity Leave as a Freelancer

    Freelancers are not covered under the Family and Medical Leave Act, but maternity leave is still doable with these tips.
  7. Professionals

    Common Interview Questions for Financial Auditors

    Identify questions commonly asked at financial auditor job interviews, and learn to formulate winning responses that give your candidacy a boost.
  8. Retirement

    5 Reasons to Start a Business After You Retire

    It can be beneficial in any number of ways: mentally, occupationally and even financially.
  9. Investing

    6 High Value and High Dividend Stocks

    Are you looking for stocks that offer regular dividends payments and will appreciate? Here are the top stocks that offer the best of both.
  10. Entrepreneurship

    The Top 5 Women-Owned Businesses in Denver

    Take a look at some of the most successful women-led companies in the Denver metro area, and learn why Denver is a great place for female entrepreneurs.
  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  2. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  3. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  4. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  5. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  6. Can hedge funds outperform the market?

    Generating returns that exceed those provided by the broader market is the goal of nearly every investor. However, the methods ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center