Where to place International REITs?

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AndroAsc
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Where to place International REITs?

Post by AndroAsc » Fri Feb 10, 2012 8:43 am

International REITs seems to be tax inefficient no matter where you place them. How do you solve this dilemma?

Taxable Account - Taxed by foreign govts and Uncle Sam. Can claim foreign tax credit from Uncle Sam.
Tax-deferred Account - Taxed by foreign govts but not by Uncle Sam (assuming Roth). Cannot claim foreign tax credit.

So ultimately it boils down to who taxes international REITs more? Foreign govt or Uncle Sam?
And the 2nd question is by how much more?

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Liquid
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Re: Where to place International REITs?

Post by Liquid » Fri Feb 10, 2012 8:53 am

I vote for the tax-deferred Account.

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G-Money
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Re: Where to place International REITs?

Post by G-Money » Fri Feb 10, 2012 9:01 am

AndroAsc wrote:How do you solve this dilemma?
Avoid them?
Don't assume I know what I'm talking about.

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grabiner
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Re: Where to place International REITs?

Post by grabiner » Fri Feb 10, 2012 8:51 pm

AndroAsc wrote:International REITs seems to be tax inefficient no matter where you place them. How do you solve this dilemma?

Taxable Account - Taxed by foreign govts and Uncle Sam. Can claim foreign tax credit from Uncle Sam.
Tax-deferred Account - Taxed by foreign govts but not by Uncle Sam (assuming Roth). Cannot claim foreign tax credit.

So ultimately it boils down to who taxes international REITs more? Foreign govt or Uncle Sam?
And the 2nd question is by how much more?
And the answer appears to be that the US taxes them much more. The foreign tax credit on Vanguard Global Real Estate is about 5% of the dividend; with only 20% of the dividend qualified, the US tax rate is 23% in a 25% bracket, 31% in a 35% bracket. In addition, the dividend yield is itself very high.
Wiki David Grabiner

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abuss368
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Re: Where to place International REITs?

Post by abuss368 » Fri Feb 10, 2012 9:05 pm

I would go with taxable and tax advantaged. Build up the fund and enjoy a nice dividend stream at retirement.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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