REITs, MLPs and Royalty Trusts

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Many investors interested in a stable source of income have had financial advisors recommend investments in Real Estate Investment Trusts (REITs), Master Limited Partnerships (MLPs) and Royalty Trusts. These investments have similarities in cash flow and tax treatment, as pass-through entities which provide investors with exposure to risk and return opportunities in the following sectors:

  • Real Estate;
  • Oil and Natural Gas;
  • Precious Metals; and
  • Natural Resources.

There are tax advantages for investors in REITs, MLPs and Royalty Trusts investments on the income paid to them. Due to depreciation and depletion, distributions a substantial portion of the income are not taxable income because of tax deductions and allowances. The deductions and allowances taken can reduce a taxpayer’s cost basis in the security, which is taxed at the lower capital gains rate and is deferred until an investor sells.

Historically, investment returns in REITs, MLPs and Royalty Trusts do not correlate with the returns of the overall securities market which enhances returns to the portfolio. Klayman & Toskes, P.A. can provide a review of your investment portfolio and provide financial advice concerning the following pass-through investments:

It is important to determine what percentage of your investment portfolio should be invested in REITs, MLPs and Royalty Trusts based on your investment objectives, risk tolerances and investment time horizon.

Investors are advised to seek competent financial, tax and legal advice concerning the decisions they make with their investments. Klayman & Toskes, P.A. can provide you with a free consultation concerning any securities industry violations related to the handling of your investments accounts by a full-service brokerage firm or registered investment advisor.

Information contained on this webpage is for educational purposes only and should not be considered legal advice.
No Information contained on this website creates an attorney-client relationship.

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