Updated: April 2025 | bremo.io financial guides

REITs in Canada 2025 — Real Estate Investing Without Buying Property

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Real Estate Investment Trusts (REITs) allow Canadian investors to gain exposure to real estate — commercial, residential, industrial, retail — without buying physical property. REITs trade on the stock exchange like any ETF or stock, making real estate investing accessible at any investment size.

What Is a REIT?

A REIT is a company that owns, operates, or finances income-producing real estate. They're required by law to distribute at least 90% of taxable income to unitholders annually, making them high-distribution vehicles. In exchange for this distribution requirement, REITs pay little or no corporate tax.

REIT appeal: REITs give individual investors proportional ownership in large commercial properties — office towers, shopping centres, industrial warehouses, apartment buildings — that would otherwise require millions of dollars to access directly.

Major Canadian REITs

Canadian Apartment REIT (CAR.UN): Canada's largest apartment REIT. Residential rental properties.
RioCan REIT (REI.UN): Major retail and mixed-use properties across Canada.
Allied Properties REIT (AP.UN): Urban office and data centre properties.
Granite REIT (GRT.UN): Industrial and logistics properties globally.
Slate Grocery REIT (SGR.UN): Grocery-anchored retail properties.

Canadian REIT ETFs

Rather than picking individual REITs, many investors use REIT ETFs for diversification:

ZRE: BMO Equal Weight REITs ETF. Equally-weighted Canadian REIT exposure. MER 0.61%.
XRE: iShares S&P/TSX Capped REIT ETF. Cap-weighted Canadian REITs. MER 0.61%.
VRE: Vanguard FTSE Canadian Capped REIT ETF. MER 0.38%.

REIT Distribution Tax Treatment

REIT distributions are complex from a tax perspective. They often include a mix of:

Other income: Taxed as ordinary income at your marginal rate
Capital gains: 50% inclusion rate
Return of capital: Not immediately taxable but reduces your cost base

Because of the complex tax treatment and ordinary income component, REITs are well-suited to hold inside a TFSA or RRSP to avoid the tax drag.

REITs vs. Direct Real Estate

REITs advantages: Instant liquidity, diversification across many properties, no maintenance headaches, any investment size, professional management.

Direct real estate advantages: Leverage (mortgage), potential for higher returns in hot markets, control, rental income with tax deductions.

For most Canadians without large capital or management capacity, REITs offer a more practical and diversified path to real estate exposure.

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