Many investors overlook 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 owner 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. A financial advisor can provide a review of your investment portfolio and provide financial advice concerning the following pass-through investments:
