Vanguard REIT Index Tax Distributions
From Bogleheads
REITS and REIT funds do possess one modest tax preference for investors, primarily those in the distribution phase of the investment life cycle, who hold them in taxable accounts. A portion of the annual income stream (reflecting non-cash flow expenses such as depreciation) is considered a return of capital (ROC) by the IRS and is not taxed upon distribution. The investor reduces the basis of the investment by the amount of the return of capital dividend and is taxed on the distribution only upon a sale of shares. The taxation of the return of capital dividend is thus deferred, and when realized, is taxed at preferential capital gains tax rates, or never paid if inherited under the step up valuation provisions of the tax code. The return of capital history of the Vanguard REIT Index Fund is given below, along with dividend and capital gains distributions. The ROC is expressed as a percentage of the total dividend distribution, and again as a yield.
| Year | Yield | Dividends/Share | ROC/Share | ROC % Dividend | ROC "yield" | Capital Gain |
| 2008 | 2.52% | 0.622 | 0.189 | 23.30% | 0.59% | 0.59% |
| 2007 | 2.27% | 0.534 | 0.113 | 17.47% | 0.40% | 0.98% |
| 2006 | 2.91% | 0.568 | 0.066 | 10.41% | 0.30% | 1.49% |
| 2005 | 3.44% | 0.565 | 0.00 | 0.00% | 0.00% | 2.49% |
| 2004 | 4.10% | 0.678 | 0.102 | 13.08% | 0.58% | 0.00% |
| 2003 | 4.90% | 0.667 | 0.093 | 12.24% | 0.60% | 0.64% |
| 2002 | 5.35% | 0.631 | 0.179 | 22.10% | 1.18% | 0.00% |
| 2001 | 5.73% | 0.644 | 0.176 | 21.46% | 1.23% | 0.00% |
| 2000 | 5.98% | 0.670 | 0.121 | 15.30% | 0.91% | 0.00% |
| 1999 | 5.19% | 0.666 | 0.144 | 17.78% | 0.92% | 0.00% |
| 1998 | 4.66% | 0.590 | 0.094 | 13.74% | 0.64% | 0.63% |
| 1997 | 5.55% | 0.341 | 0.014 | 3.94% | 0.22% | 0.04% |
See also
- Real Estate Investment Trust
- Percentages of REITs Present in Vanguard Index Funds
- Vanguard Fund Info
Links
- Current tax attributes and distributions: Vanguard
- Current REIT fund yield
How to Cite
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Please see [url=http://www.bogleheads.org/wiki/Vanguard_REIT_Index_Tax_Distributions]Vanguard REIT Index Tax Distributions[/url] on the [url=http://www.bogleheads.org/wiki/Main_Page]Bogleheads Wiki[/url].
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