Section 199A Dividends on a Non-Traded REIT 1099-DIV: How 21 REITs Say Their 2025 Distributions Were Taxed

What the boxes on a REIT 1099-DIV mean, in the IRS's words

A REIT distribution is split three ways for tax, and each part goes to a different box:

• Ordinary dividends (box 1a), most of which also go in box 5. The IRS instructions to Form 1099-DIV tell the REIT to report in box 5 “the qualified REIT dividends paid by a REIT” and add that “this amount is included in the amount reported in box 1a.” The Form 8995 instructions define them: “Qualified REIT dividends include any dividends you received from a REIT held for more than 45 days” that are not capital gain dividends or qualified dividends. Section 199A lets you deduct “20 percent of the aggregate amount of the qualified REIT dividends.”
• Capital gain distributions (box 2a), from properties the REIT sold. Not eligible for the 20% deduction, but taxed at capital gain rates; part may be unrecaptured section 1250 gain.
• Nondividend distributions (box 3), meaning return of capital. IRS Publication 550: “A nondividend distribution reduces the basis of your stock. It is not taxed until your basis in the stock is fully recovered.”

The 45-day holding requirement in the regulation (a share “held by the shareholder for 45 days or less” around the ex-dividend date does not qualify) rarely matters for a non-traded REIT you hold for years. The sunset matters more: section 199A used to say “This section shall not apply to taxable years beginning after December 31, 2025”, and Public Law 119-21 (July 4, 2025) replaced that subsection, so the deduction continues for 2026 dividends (our reading of the amended statute).

2025, REIT by REIT

Each REIT's 10-K gives the split as a share of its 2025 distributions. Some count distributions paid in the calendar year, so the one declared in December and paid in January falls into the next year: BREIT says so explicitly (“The distributions declared on December 31, 2025, 2024 and 2023 were paid in January of the following year”), and Brookfield, Invesco and Nuveen use the same basis. Class I NAV is at December 31, 2025. The median of the return-of-capital column is our arithmetic.

Three things stand out. First, for most of these REITs the 199A deduction is a small number or zero, because there is little or no ordinary income to apply it to. Second, the split moves a lot from year to year: J.P. Morgan REIT went from 6% to 25% ordinary income, Fortress from 40.86% to 15.00%, Invesco from 85.23% capital gain in 2024 to 30.18% in 2025, Blue Owl's net lease trust from 100% return of capital to 70%. Last year's 1099 is a weak guide to the next one. Third, capital gains show up when REITs sell property. Invesco's 10-K adds that unrecaptured section 1250 gain was 27.57% of total 2025 distributions paid. Ares Industrial explains its 100% return of capital directly: “In 2025, we experienced an overall tax loss.”

FS Credit REIT, whose strategy is to “originate, acquire and manage a portfolio of senior loans secured by commercial real estate”, is the outlier in the other direction and its 10-K is internally awkward: the table says 67% ordinary income and 33% return of capital, while a footnote says “ordinary dividends were 98 %, 98 % and 99 %, respectively, of total distributions, and qualifying dividends were 2 %”. We report both as written; the 1099-DIV you receive is the document that counts.

The seven that do not say

Starwood Real Estate Income Trust, JLL Income Property Trust, Apollo Realty Income Solutions, Cantor Fitzgerald Income Trust, BGO Industrial Real Estate Income Trust, InPoint Commercial Real Estate Income and Principal Credit Real Estate Income Trust give no 2025 tax split in their FY2025 10-K; we searched each for return of capital, ordinary income, characterization, 199A, nondividend and capital gain. That is not a sign of anything wrong. It means the holder learns the split only from the 1099-DIV, in early 2027 for the 2026 tax year, and cannot plan a December sale with it. Starwood paid $1.2420 per share in 2025 and its Class I NAV was $19.96 at December 31, 2025; JLL's Class I NAV was $11.27.

Return of capital and your basis: the December arithmetic

This is where the table turns into money. IRS Publication 550 is plain about it: return of capital “reduces the basis of your stock”, and “when the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain.” Nobody sends you a running basis figure for a non-traded REIT; you add up box 3 yourself, year by year.

A hypothetical, using the rule and round numbers (our arithmetic): you put $100,000 into a REIT at the start of 2023, it paid you 5% a year and, like BREIT, Ares Industrial or Hines, called all or nearly all of it return of capital. After three years you have received $15,000 and your basis is $85,000. Suppose NAV is now 10% below what you paid, so the shares are worth $90,000. Selling is a $5,000 capital gain, not a $10,000 loss. To show a loss at all, the price would have to be below $85,000. On the secondary market, where outside offers for non-traded REIT shares are usually below NAV (see our tender offer census), the loss is real, but it is still measured from the reduced basis, not from what you paid.

Two more December traps:

• Wash sales. Publication 550: “A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you” buy substantially identical stock, including when you “acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA.” A distribution reinvested in more shares of the same REIT within that window is a purchase of the same stock (our reading). Turn off reinvestment, and check the IRA, before a loss sale.
• Timing of the exit. Most of these REITs repurchase shares monthly or quarterly at NAV and cap how much they buy (BREIT’s plan is limited to “no more than 2% of our aggregate NAV per month” and 5% per quarter); where a fund is prorating, a December request may not be filled in full. The status of each plan is in our NAV REIT redemption tracker.

If you hold a BDC instead

A BDC that is taxed as a regulated investment company can only pay section 199A dividends out of REIT dividends it receives itself: the 1099-DIV instructions say a RIC's section 199A dividends are “limited to the amount of qualified REIT dividends includible in the RIC's taxable income for the year.” A BDC that lends to private companies will usually report its distributions as ordinary dividends with little or nothing in box 5, and the return-of-capital and wash-sale points above apply the same way.

What a holder can do with this

• Before December 31: add up the box 3 amounts on every 1099-DIV you have received for the REIT and subtract them from what you paid. That adjusted basis, not your purchase price, decides whether a sale this year is a loss.
• If the REIT is in the 100% return-of-capital group (BREIT, Ares Industrial, Hines, Brookfield in 2025), expect little or nothing in box 5 and a basis that falls by roughly the whole distribution each year.
• If it is one of the seven that do not publish the split, ask the sponsor's investor relations for the prior-year character before you plan around it; the 10-K will not tell you.
• If you are selling at a loss, stop distribution reinvestment and check IRA purchases of the same REIT for 30 days on each side of the sale.
• When the 2026 forms arrive, the 20% deduction applies to box 5 on Form 8995 or 8995-A, and the box 3 amount goes nowhere on your return except into your own basis records.

More on the REITs themselves: BREIT and our ranking of NAV REITs. For losses on platforms that failed rather than REITs that fell, see tax loss harvesting for crowdfunding losses.

FAQ

Sources, read and saved on October 5, 2026: the Form 10-K for fiscal 2025 of each of the 21 REITs named, from SEC EDGAR, with each accession number in the CSV (Blackstone Real Estate Income Trust 0001662972-26-000032; Starwood 0001193125-26-117060; Ares Real Estate Income Trust 0001628280-26-015437; Ares Industrial 0001628280-26-015438; JLL Income Property Trust 0001314152-26-000030; Hines Global Income Trust 0001628280-26-022047; Apollo Realty Income Solutions 0001193125-26-100102; Brookfield 0001713407-26-000021; Nuveen Global Cities 0001711799-26-000015; Cantor Fitzgerald Income Trust 0001193125-26-120239; Invesco 0001756761-26-000032; J.P. Morgan 0001193125-26-107971; BGO Industrial 0001104659-26-032802; InPoint 0001690012-26-000002; North Haven Net REIT 0001999784-26-000021; Blue Owl Net Lease 0001944366-26-000020; FS Credit 0001628280-26-017626; Cottonwood 0001692951-26-000055; RREEF 0001542447-26-000020; Principal Credit 0001628280-26-021465; Fortress Net Lease 0001193125-26-126080); IRS Instructions for Form 1099-DIV, Instructions for Form 8995 (2025) and Publication 550 (2025); 26 U.S.C. 199A and 301; and 26 CFR 1.199A-3 on the eCFR. The median, the hypothetical and the counts are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.