GLOSSARY · BLOCKCHAIN & WEB3
REIT (Real Estate Investment Trust)
What a REIT is: 26 U.S.C. 856 requirements (assets, income, 100 shareholders, 90% payout), how it differs from Spain's SOCIMI and where tokenization fits.
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What is a REIT?
A REIT (real estate investment trust) is a U.S. corporation, trust or association that invests mainly in real estate or mortgages and that, if it distributes at least 90% of its taxable income, can deduct the dividends it pays. It is governed by the Internal Revenue Code, 26 U.S.C. 856 to 860. It was created by Public Law 86-779 of September 14, 1960. Its Spanish counterpart is the SOCIMI.
Requirements (26 U.S.C. 856 and 857).
- Form: a corporation, trust or association managed by directors or trustees, with transferable shares or certificates, that is neither a bank nor an insurance company (856(a)). It must elect REIT status on its return (856(c)(1)).
- Shareholders (from the second taxable year): 100 or more for at least 335 days of the year, and five or fewer individuals may not own more than 50% of its value at any time during the last half of the year (856(a)(5)-(6), 856(b) and 856(h), which refers to section 542(a)(2)).
- Income: at least 95% from dividends, interest, rents and similar gains, and at least 75% tied to real estate, such as rents or mortgage interest (856(c)(2) and (c)(3)).
- Assets: at the close of each quarter, at least 75% in real estate assets, cash and government securities (856(c)(4)(A)).
- Payout: dividends of at least 90% of its REIT taxable income, excluding net capital gain (857(a)(1)). It is taxed as a corporation on that income, computed after deducting dividends paid (857(b)(1) and (b)(2)(B)).
What the law does not require: a listing. Section 856 calls for transferable shares and 100 holders, not a stock exchange listing. That is a clear difference from the SOCIMI, which must be listed and have EUR 5 million in capital (Arts. 4 and 5 of Spain's Law 11/2009) and pays a 0% corporate tax rate (Art. 9.1).
| SOCIMI | REIT (U.S.) | Real estate token | |
|---|---|---|---|
| Law | Law 11/2009 | 26 U.S.C. 856 to 860 | That of its vehicle; Law 6/2023 if it is a security |
| Listing | Mandatory (Art. 4) | Not required | Not required |
| Minimum | EUR 5M in capital | 100 holders | That of the corporate form |
| Payout | 100%, 50% and 80% by source | 90% of taxable income | Whatever the offering sets |
| Entity-level tax | 0% corporate tax | Deducts dividends paid | That of its vehicle |
REITs and tokenization. If a REIT's shares are issued or recorded as tokens, they are still securities. SEC staff say so in their Statement on Tokenized Securities of January 28, 2026: the format of a security, or whether holders are recorded onchain or offchain, does not affect how the federal securities laws apply. It is a statement by staff of three divisions, with no legal force. For how it is structured in practice, see real estate tokenization in the United States. The FIBRA is the Mexican equivalent.
How we work. In the U.S., Unknown Gravity builds the platform, smart contracts and integrations, working with the client's U.S. securities counsel and with registered intermediaries (transfer agent, broker-dealer or funding portal). We are not a broker-dealer, transfer agent, investment adviser or law firm.
Official sources: 26 U.S.C. 856 (Office of the Law Revision Counsel); 26 U.S.C. 857; SEC, Statement on Tokenized Securities (January 28, 2026); Spain's Law 11/2009 (BOE). Framework verified as of October 13, 2026. A real estate project in the U.S. or Spain? Talk to us.
Learn more: Asset tokenization in the United States: Reg D, Reg A+, Reg CF and Reg S explained
Explained simply
A REIT is a U.S. company that owns real estate or mortgages and pays out almost all its profit as dividends in exchange for favorable tax treatment. It can be listed on a stock exchange, but the law does not require it. Its Spanish counterpart is the SOCIMI.
REIT: key points
- A U.S. Internal Revenue Code vehicle (26 U.S.C. 856 to 860), created in 1960
- At least 100 shareholders and no more than 50% of its value held by five or fewer individuals (856(a) and (h))
- Quarterly and annual tests: 75% real estate assets and 75% and 95% qualifying income (856(c))
- Distributes at least 90% of its taxable income and deducts dividends paid (857)
- The law does not require a listing; the Spanish SOCIMI does (Art. 4 of Law 11/2009)
REIT: advantages
- No double taxation on the income it distributes
- Regular income thanks to the mandatory payout
- Diversification: a portfolio of properties or mortgages in a single share
REIT: disadvantages
- Requirements checked every quarter (assets) and every year (income and payout)
- Little retained income to grow without raising equity or debt
- No investor control over specific properties