Equity Residential's 2024 Dividend Income Tax Treatment: A Closer Look

Equity Residential (EQR), a leading multi-family real estate investment trust (REIT), has recently reported the tax status of its 2024 dividends paid to shareholders. As an investor, understanding the tax treatment of these dividends is crucial for planning your financial strategy. Let's dive into the details and explore the implications of these allocations.

For common shares, the total distribution per share in 2024 was $2.6875, consisting of $1.530947 in ordinary dividends and $1.156553 in capital gain distributions. The quarterly dividends were $0.6625 (Q1) and $0.675 (Q2-Q4). For Series K preferred shares, the total distribution per share was $4.1450, including $2.361220 in ordinary dividends and $1.783780 in capital gain distributions. The dividends were paid in four equal installments of $1.036250.

The capital gain distributions are subject to different tax rates, with one-year amounts ranging from $0.016926 to $0.017245 per share for common shares and $0.026474 to $0.026474 per share for Series K preferred shares. The three-year amounts range from $0.013464 to $0.013718 per share for common shares and $0.021060 to $0.021060 per share for Series K preferred shares.



The capital gain distributions can have a significant impact on the overall tax liability for shareholders, as they are taxed at higher rates than ordinary dividends. For example, in the 2021 U.S. federal income tax brackets for single filers, capital gains are taxed at a maximum rate of 20% for income above $408,050, while ordinary dividends are taxed at a maximum rate of 37% for income above $518,400. This means that shareholders may face a higher tax burden due to the capital gain distributions.

To mitigate the impact of capital gain distributions on their overall tax liability, shareholders should consider consulting their own tax advisers to understand the federal, state, and local income tax consequences of these dividends. Additionally, shareholders should be aware of the one-year and three-year amounts disclosed for Section 1061 purposes, as these can affect the tax treatment of the dividends.

In conclusion, Equity Residential's 2024 dividend income tax treatment allocations provide valuable insights into the tax implications of investing in the company's common and preferred shares. By understanding the tax treatment of these dividends, shareholders can better plan their financial strategies and make informed decisions about their investments. As always, it is essential to consult with a financial or tax professional to ensure that your specific situation is taken into account.