NexPoint Residential Trust's 2024 Dividend Income Tax Treatment: A Boon for Investors

NexPoint Residential Trust (NXRT) has recently announced the tax treatment of its 2024 dividend distributions, providing investors with valuable insights into the potential tax implications of their investments. As a publicly traded REIT, NXRT is required to distribute at least 90% of its taxable income as dividends, making it an attractive option for income-oriented investors. Let's dive into the details of the 2024 dividend income tax treatment and explore how it benefits investors.



NXRT's 2024 dividend income tax treatment is as follows:

| Ex-Dividend Date | Record Date | Payable Date | Distribution Per Share | Taxable Ordinary Income Per Share | Taxable Capital Gain Distr. Per Share | Unrecap. Sec. 1250 Gain Per Share | Return of Capital Per Share |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 3/14/2024 | 3/15/2024 | 3/28/2024 | $0.46242 | $0.00000 | $0.31409 | $0.19558 | $0.14833 |
| 6/14/2024 | 6/14/2024 | 6/28/2024 | $0.46242 | $0.00000 | $0.31409 | $0.19558 | $0.14833 |
| 9/13/2024 | 9/13/2024 | 9/30/2024 | $0.46242 | $0.00000 | $0.31409 | $0.19558 | $0.14833 |
| 12/13/2024 | 12/13/2024 | 12/31/2024 | $0.51000 | $0.00000 | $0.34641 | $0.21571 | $0.16359 |
| Totals | | | $1.89726 | $0.00000 | $1.28868 | $0.80245 | $0.60858 |

Qualified REIT Dividend Status for Section 199A

One of the most significant aspects of NXRT's 2024 dividend income tax treatment is the qualified REIT dividend status for purposes of Section 199A. This allows investors to treat 100% of the amount reported as Taxable Ordinary Income as a qualified REIT dividend. This means that investors can potentially qualify for a 20% deduction on their taxable income, as per the Tax Cuts and Jobs Act (TCJA). This deduction is subject to certain limitations and phaseouts based on the investor's taxable income and filing status. By receiving qualified REIT dividends, investors can effectively reduce their tax liability, making their investment in NXRT more attractive.

Capital Gain Distributions and Additional Information for Section 1061

NXRT's 2024 dividend income tax treatment also includes capital gain distributions, which can impact investors' tax liabilities. According to the information provided, NXRT has disclosed additional information related to these capital gain distributions pursuant to Treasury Regulation §1.1061-6(c). This additional information is intended to help investors better understand the tax implications of these distributions.

In the table provided, the "Section 897 Capital Gain amount" is equal to 100% of the total Capital Gain Distribution reported on Form 1099-DIV. This amount is relevant for purposes of Section 1061, which generally applies to direct and indirect holders of "applicable partnership interests." The "One Year Amounts" and "Three Year Amounts" required to be disclosed are both zero with respect to the 2024 distributions, since all capital gain dividends relate to Section 1231 gains.

Pursuant to Treasury Regulation §1.1061-6(c), NXRT is disclosing additional information related to the capital gain distributions reported on Form 1099-DIV. This information is intended to help investors better understand the tax implications of these distributions and how they may impact their overall tax liabilities. By providing this additional information, NXRT is helping investors make more informed decisions about their investments and the potential tax consequences associated with them.

In conclusion, NexPoint Residential Trust's 2024 dividend income tax treatment offers investors several benefits, including the qualified REIT dividend status for purposes of Section 199A and the disclosure of additional information related to capital gain distributions. By understanding the tax implications of their investments, investors can make more informed decisions and potentially reduce their tax liabilities. As always, it is essential to consult with a tax professional or financial advisor to determine the best course of action for your specific situation.