Business Today reported on 5 October 2026 that distributions from India's listed REITs had more than doubled from a year earlier. Part of the rise came from more listed trusts, up from four to six. As Indian REITs draw more attention at home, more Indian investors are asking whether U.S. REITs deserve a place in their portfolios as well.
Buying a U.S. REIT from India is not difficult. The harder part is understanding what the investor actually owns, how much of each dividend the U.S. keeps, and what happens to the shares if the investor dies. Those three points, rather than the share price, decide whether a listed REIT suits an Indian portfolio, and they also explain how it differs from private U.S. commercial real estate. The U.S. real estate market guide covers the property types behind both routes in more depth.
What a U.S. REIT Is and What an Investor Owns
A real estate investment trust is a company that owns, and usually operates, income-producing property such as apartments, warehouses, offices, shopping centres or data centres. According to the SEC's investor education site, REITs pay out most of their taxable income to shareholders as dividends. As a result, much of the cash a REIT's properties earn passes through to shareholders rather than staying inside the company.
Most U.S. REITs that Indian investors can reach are listed on a stock exchange. An investor who buys one owns shares in a company, not a slice of any building. That share trades every day, so its price reflects stock market sentiment, interest rates and the market's view of management as well as the value of the properties. A listed REIT can fall in price on a day when nothing has changed at its buildings.
The U.S. also has non-traded REITs, which do not list their shares. The SEC warns that these are illiquid and that their value per share may not be published for a long period. Sales charges and upfront fees can also take a large part of the amount invested. Most Indian investors will meet listed REITs through an overseas brokerage account rather than these products.
How Indian Investors Buy U.S. REITs
Resident individuals usually buy U.S. REITs through an overseas brokerage account funded under the Liberalised Remittance Scheme. LRS allows each resident individual to send up to US$250,000 abroad in a financial year, which runs from 1 April to 31 March, for permitted purposes including overseas investment. The remittance goes through the investor's authorised dealer bank, which reviews Form A2 and confirms the purpose code before releasing the money.
Tax collected at source applies when the money leaves India. For financial year 2026-27, TCS on investment remittances is nil up to ₹10 lakh and 20% on the amount above that. TCS is not a final tax, because it can be claimed as a credit or refund in the income tax return. It does, however, hold up cash until that return is processed.
Some investors prefer funds that hold U.S. REITs, which changes the paperwork and the tax treatment because the investor owns fund units rather than U.S. shares. Each route has its own costs, and none removes the market risk of the underlying REITs.
How U.S. REITs Are Taxed for Indian Investors
Dividends hold the first surprise. The U.S. withholds tax on dividends paid to nonresidents at 30% unless a treaty lowers the rate. Under Article 10 of the India-US tax treaty, dividends from a U.S. REIT do not qualify for the lower 15% rate available to some company shareholders. An Indian resident individual who holds less than 10% of the REIT can claim the 25% treaty rate, usually by giving the broker a W-8BEN form.
The dividend is then taxed again in India at the investor's slab rate, as part of total income. The India-US Double Taxation Avoidance Agreement lets the investor claim a credit for the U.S. tax withheld, up to the Indian tax on the same income. From tax year 2026-27 that claim is made on Form 44, which replaced Form 67 for foreign tax credit under the Income-tax Rules, 2026. Raveum has explained how U.S. dividend tax works in India in more detail.
Selling the shares raises a separate question. Gains are taxed in India as capital gains on foreign shares, and whether they count as short or long term depends on how long the shares were held. Every holding of U.S. shares must also be reported in Schedule FA of the Indian return, even in a year with no sale and no dividend. The U.S. real estate tax guide for Indian investors sets out how these rules fit together.
Why U.S. Estate Tax Matters More Than Investors Expect
The point most often missed is U.S. estate tax. The IRS treats shares of U.S. corporations as U.S. assets for a nonresident who is not a U.S. citizen, even when the shares are held through a foreign broker. If those U.S. assets are worth more than US$60,000 at death, the executor must file Form 706-NA, and U.S. estate tax can be due.
India and the U.S. have no estate tax treaty, so Indian families cannot rely on a treaty to narrow what counts. A family holding listed U.S. REITs, U.S. stocks and U.S.-domiciled funds should count them together against that threshold. The U.S. estate tax guide explains how the tax is worked out and how families plan for it.
Risks and Limits of Listed U.S. REITs
Listed REITs carry the risks of the property they own and the risks of the stock market at the same time. Their prices can fall sharply when interest rates rise, because higher rates raise borrowing costs and make other income assets more competitive. The Federal Reserve raised its target range on 16 September 2026, its first increase in more than three years, which shows how quickly the rate backdrop can change.
- Loss of capital, because share prices can fall below the purchase price and stay there.
- Dividends being cut or suspended when tenants leave, rents fall or the REIT needs cash.
- Leverage and refinancing, because most REITs borrow and must refinance debt at the rates available at the time.
- Currency movements, because dividends and sale proceeds arrive in dollars and their rupee value can rise or fall.
- Concentration, because many REITs focus on one property type or one region.
For Indian families, the guide to dollar assets for Indian investors explains how currency moves affect rupee wealth in both directions. A listed REIT can be sold on any trading day, which is a real advantage over private property. That liquidity has a cost, however, because the investor must accept whatever price the market offers on the day cash is needed.
How Private U.S. Real Estate Differs From a Listed REIT
Private U.S. commercial real estate answers a different question. Instead of a share in a listed company, the investor holds an interest in a specific property or portfolio, usually in its own legal entity. A sponsor, meaning the firm that finds, finances and manages the deal, runs it. Its value is set by appraisals and eventual sale rather than daily trading, so its reported value moves less often, which does not mean it carries less risk.
The trade-offs run both ways. Private investments are illiquid, often for several years, and the investor usually cannot sell before the property is sold or refinanced. Offshore investors typically invest through a U.S. corporation, known as a blocker, that holds the property interest, and they receive Form 1042-S for U.S. tax withheld. Shares in that corporation are also U.S. assets for estate tax purposes, so the estate tax question does not disappear, and liquidity in private real estate is worth understanding fully before comparing the two routes.
Choosing Between a Ticker and a Property
Indian REITs have made the structure familiar, and buying a U.S. REIT from India now takes little more than an LRS remittance and a brokerage account. The decision is less simple than the purchase. A U.S. REIT offers daily liquidity and a spread of properties, but it also brings 25% U.S. withholding on dividends, a second layer of tax in India, Schedule FA reporting and possible U.S. estate tax once U.S. assets pass US$60,000.
Private U.S. real estate changes that mix rather than improving it, replacing daily price swings with illiquidity and dependence on one sponsor's execution. Investors who understand those differences can decide which route, if either, fits their family's plans, their tax position and their need for cash, and the guide to the U.S. real estate market is a useful next step for understanding the properties behind both. Eligible investors can review how investing in U.S. real estate from India works on Raveum, including the property, sponsor, ownership structure, fees, risks and offering documents for each opportunity.
Frequently asked questions
Can Indian residents invest in U.S. REITs?
Yes. Resident individuals can buy listed U.S. REITs through an overseas brokerage account funded under the Liberalised Remittance Scheme, within the US$250,000 limit per person in each financial year. The authorised dealer bank reviews each remittance, and TCS applies above ₹10 lakh. Companies, firms, HUFs and trusts cannot use LRS for this purpose.
How much U.S. tax is withheld on REIT dividends for Indian investors?
An Indian resident individual holding less than 10% of a U.S. REIT can claim the 25% rate under the India-US tax treaty, usually by filing Form W-8BEN with the broker. Without that form, the U.S. generally withholds 30%. REIT dividends do not qualify for the treaty's lower 15% rate for company shareholders.
How are U.S. REIT dividends taxed in India?
They are added to the investor's total income and taxed at the applicable slab rate. The investor can claim a credit for the U.S. tax withheld, up to the Indian tax on that income, under the India-US Double Taxation Avoidance Agreement. From tax year 2026-27, the claim is filed on Form 44, which replaced Form 67.
Do U.S. REIT shares attract U.S. estate tax for Indians?
They can. The IRS treats shares of U.S. corporations as U.S. assets for nonresidents who are not U.S. citizens, wherever the shares are held. If U.S. assets exceed US$60,000 at death, the executor must file Form 706-NA. India has no estate tax treaty with the U.S. that would limit this exposure.
Are U.S. REITs easier to sell than private real estate investments?
Listed U.S. REITs can usually be sold on any trading day, while private real estate is typically illiquid for several years. That liquidity comes with price risk, because the investor must accept the market price on the day of sale, which may be below the purchase price. Non-traded REITs are generally illiquid as well.
What risks should Indian investors consider before buying U.S. REITs?
The main risks are loss of capital, dividends being cut, sensitivity to interest rates, leverage and refinancing, currency movements and concentration in one property type. Investors should also weigh U.S. withholding, Indian tax, Schedule FA reporting and possible U.S. estate tax before deciding whether a listed REIT suits their plans and need for cash.
This article is for general education only and is not investment, tax or legal advice. Rules change and depend on individual circumstances. Investing in private real estate involves risk, including loss of capital, illiquidity, falling property values, distributions not being paid and currency movements. Participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and offerings on Raveum are not open to the general public.
