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Not all REIT dividends are non qualified dividends. The amount considered as Nondividend distribution(Return of capital) are used to reduce cost basis and therefore increase the amount of capital gain upon sale. They are tax deferred and tax preferred outside an IRA/401K. We also have a temporary benefit of Qualified Business Income(QBI) which allows you to exclude 20% of it from taxation again outside an IRA/401K. The non qualified dividends are the amount that qualifies for QBI. Finally gains on sale of assets are capital gains; although some of those gains are subject to depreciation recapture. If you are in the 10% and just about all of the 12% bracket your capital gain rate is zero.

As you age the value of the tax deferral also declines as you withdraw those funds because of Required Minimum Distributions(RMD) or simply the need to fund your retirement. As the national debt continues to increase also ask yourself what is the risk of tax rates going up!

In summary holding REITS in an IRA has its benefits but there are also substantial offsets to this.
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