Non-Traded REIT

DEFINITION of 'Non-Traded REIT'

A form of real estate investment method that is designed to reduce or eliminate tax while providing returns on real estate. A non-traded REIT does not trade on a securities exchange, and because of this it is quite illiquid for long periods of time. Front-end fees can be as much as 15%, much higher than a traded REIT due to its limited secondary market.

BREAKING DOWN 'Non-Traded REIT'

Early redemption of a non-traded REIT can result in high fees that can lower the total return. Like exchange-traded REITs, non-traded REITs are subject to the same IRS requirements, which include returning at least 90% of taxable income to shareholders. Investors tend to seek exchange-traded and non-traded REITs for their income distribution.