Frankfort KY Real Estate

Frequently, the complexities and densities of urban neighborhoods preclude other competitive projects, offering additional reward for real estate Frankfort investors and retailers. REITs are the largest holders of institutional real estate, surpassing life insurance and pension funds.

Frankfort Real Estate

Frankfort is the capital of Kentucky and has a vast array of architectural styles, famous landmarks, museums of Kentucky's past and unique shopping.

A real estate investment trust (REIT) is a trust or corporation that serves as a channel for the real estate Frankfort investments of its shareholders. An REIT shares a lot of advantages with stock investment companies. Funds are pooled to take advantage of big investment opportunities; the best possible legal counsel is available; and, the added safety and probability of higher returns from widely diversified investment projects.

REITs can be categorized as equity trusts, mortgage trusts (short-term or long-term) or combination (balanced) trusts. An equity trust owns real property - residential, commercial, or industrial and its main source of income is rent. It may buy or construct buildings, develop Frankfort Kentucky Real Estate projects, lease properties, collect rent, and place mortgages on its properties. Such a trust cannot hold any property primarily for sale to customers and it takes depreciation on its properties and distributes at least 95 percent of its net income to its shareholders. An equity trust has both internal and external sources of growth capital. Internal sources are refinancing of its mortgage debt and retaining of capital gains when property is sold. External sources are the public sale of its securities, acquisition of properties in exchange for its securities, and short-term bank loans.

Mortgage trusts invest their assets in short-term or long-term mortgages or other liens against real property. Their primary source of income is from interest earned from their mortgage portfolios or from commissions and discounts on mortgages purchased. A short-term mortgage trust's investment objective stresses 6 to 24-month construction and development loans usually funded through use of commercial paper or bank loans. Maximum profits are realized by continual increase of short-term leverage, thereby netting the spread between the trust's cost of funds and its contractual lending rates. The investment objectives of a long-term mortgage trust emphasize 20 to 30-year amortized loans, including equity participation loans. Equity trusts and mortgage trusts both outnumber combination trusts, which are able to develop property, own property, lease property, provide mortgage financing and land development loans, etc. There are many other technical and involved provisions explained in federal law, Internal Revenue Service rulings, and other state regulations.

A REIT is accorded special tax treatment because most of its income is received from real estate Frankfort KY and distributed to the shareholders. They are also subject to qualifications and limitations. A Frankfort Kentucky Real Estate investment trust must not hold property primarily for sale to customers in the ordinary course of business and must be beneficially owned by at least 100 investors. No five, or fewer, persons may hold more than 50 percent of the beneficial interests and transferable shares or certificates of interest must evidence the beneficial interest. The investments must account for a minimum of 95 percent of the trust's gross income and 75 percent of gross income must come from real estate investments. Less than 30 percent of the trust's gross income may result from short-term gains on sales of stock or securities held for less than six months plus sales (but not involuntary conversions) of real estate held less than four years. The accounting period must be the calendar year. The usual penalty for not meeting the qualifications is the loss of REIT status. Licensees must contact the IRS for the most current tax law involving REITs.