Many financing options are available for investors looking at the very attractive, relatively maintenance-free solar farms as a means to a safe, diverse portfolio. One of them is the REIT — Real Estate Investment Trust.
These trusts are not double taxed such as traditional corporate access. Plus, they only invest in certain assets, such as real property. The trusts pass through their income, not their tax liability to investors. And their dividends are considered ordinary income. Does this structure make sense for solar farms?
REITS can even be used in IRAs, whereas MLP income can be taxable, even if your MLP is contained in an Individual Retirement Account.
REITS have been around since the Kennedy Administration, so they’re tried and true. Congress first passed the model for them in the1960s. Their aim was to help small investors have the same advantages as larger ones.
Another plus of the REIT structure for setting up solar farms is that they do not require Congressional Acts for photovoltaics to fall into the REIT-included class of investments. True, they need approval of the Internal Revenue Service for a particular solar farm to be considered real property. But any experienced solar developer can make this easily happen. And it is certainly less cumbersome than trudging through the slow and often disappointing experience of Congressional Approval.
The trusts have recently become in vogue because of all these advantages. Contact our team of experts for more information about solar farms today.