What IRS Form 1120-REIT (2025) Is For

Form 1120-REIT is the U.S. Income Tax Return for Real Estate Investment Trusts, used by corporations, trusts, or associations that elect to be treated as REITs to report their income, gains, losses, deductions, credits, and certain penalties. Any entity that has made a REIT election (or made it in a prior year and hasn't terminated or revoked it) must file this form to maintain their REIT status and calculate their tax liability (IRS Instructions for Form 1120-REIT (2025)).

When You'd Use Form 1120-REIT for 2025 (Late or Amended Filing)

Late filing situations typically arise when REITs receive IRS notices for unfiled returns, discover calculation errors requiring corrections, or need to claim missed deductions or credits. You might file late if you missed the original April 15, 2026 deadline (for calendar year 2025 returns) or the extended October 15, 2026 deadline. Unlike individual returns, there's no statute of limitations for claiming refunds on business returns that were never filed, so even very late filings can potentially result in refunds if the REIT overpaid estimated taxes or had excessive withholding. REITs commonly file amended returns to correct REIT qualification test calculations, adjust the dividends paid deduction, or revise income source classifications that affect their tax-free status.

Key Rules Specific to 2025

For returns required to be filed in 2025 and beyond, the IRS has increased the minimum penalty for late filing to the smaller of the tax due or $510 (up from previous years), applicable to returns filed more than 60 days after the due date (IRS Instructions for Form 1120-REIT (2024)). The REIT qualification requirements remain consistent, including the critical 90% distribution requirement where REITs must distribute at least 90% of their taxable income (excluding net capital gains and the dividends paid deduction) plus 90% of excess foreclosure property income, less any excess noncash income. REITs must continue using calendar tax years unless they qualified before October 5, 1976, and the $30 million average gross receipts threshold for mandatory accrual accounting remains in effect.

Step-by-Step (High Level)

• Gather tax transcripts: Request account transcripts from the IRS for the tax year to understand any payments, penalties, or previous filing attempts
  
  
• Complete the correct year's form: Use the official 2025 Form 1120-REIT, not draft versions, ensuring all income, deduction, and credit calculations reflect proper REIT qualification requirements
  
  
• Attach required schedules: Include Schedule A (Dividends Paid Deduction), Schedule J (Tax Computation), Schedule K (Other Information), Schedule L (Balance Sheets), Schedule M-1 (Book/Tax Reconciliation), and any applicable forms like Schedule D for capital gains
  
  
• File electronically or mail: Submit to the appropriate IRS processing center based on your principal business location and total assets, using certified mail for paper returns
  
  
• Keep complete copies: Maintain copies of the filed return, all schedules, supporting statements, and proof of filing for your records
  
  

Common Mistakes and How to Avoid Them

• Failing the 90% distribution test: Calculate the dividends paid deduction carefully, ensuring you meet the requirement to distribute at least 90% of REIT taxable income—this is the most common disqualifier for REIT status
  
  
• Incorrect income source classification: Properly categorize rental income, interest, dividends, and capital gains to meet the 95% and 75% gross income tests required for REIT qualification
  
  
• Missing Schedule A calculations: The deduction for dividends paid is critical for REITs and requires detailed computations including timing of payments and deficiency dividends
  
  
• Inadequate supporting documentation: Attach required statements for "other income" and "other deductions" rather than leaving them unexplained, as IRS reviewers need clear explanations
  
  
• Forgetting foreclosure property reporting: If applicable, complete Part II for foreclosure property income and the associated 21% tax, as this affects overall REIT tax calculations
  
  
• Electronic filing errors: Double-check that estimated tax payments, prior year overpayments, and extension payments are properly reported to avoid balance due notices
  
  

What Happens After You File

The IRS typically processes REIT returns within 2-4 months, though complex returns or those requiring manual review may take 6 months or longer. You'll receive either a refund check, a balance due notice, or a letter accepting the return as filed. If you owe additional tax, you can set up an installment agreement using Form 9465 if you cannot pay the full amount immediately—the IRS offers both short-term (120 days or less) and long-term payment plans for qualified taxpayers (IRS.gov/payments). Interest and penalties continue to accrue on unpaid balances, but entering into an approved payment plan can help minimize additional failure-to-pay penalties. If the IRS proposes changes to your return, you have appeal rights through the Office of Appeals and can represent your position with additional documentation or professional representation.

FAQs

How long do I have to file a late REIT return without losing my REIT election?

There's no specific deadline that automatically terminates REIT status for late filing alone, but you'll face increasing penalties and interest. The REIT election continues until formally revoked or you fail to meet qualification requirements for an entire tax year.

What's the penalty for filing my 2025 Form 1120-REIT late?

The penalty is 5% of unpaid tax per month (or part of a month), up to 25% maximum. For returns filed more than 60 days late, there's a minimum penalty of $510 or the tax due, whichever is smaller (IRS Instructions for Form 1120-REIT (2024)).

Do I need to get tax transcripts before filing a late return?

Yes, request account transcripts from the IRS to see any estimated tax payments, extension payments, or penalties already assessed. This ensures you report all payments correctly and avoid duplicate penalty assessments.

Can I claim a refund on a late-filed REIT return?

Unlike individual returns, there's generally no statute of limitations for claiming refunds on business returns that were never filed, so you may be entitled to refunds of overpaid estimated taxes or excessive withholding even on very late returns.

Should I amend my state REIT returns if I file a late or amended federal return?

Most states require conformity with federal REIT elections and tax calculations, so you'll likely need to file corresponding state returns or amendments. Check with each state where you have filing requirements, as deadlines and penalty structures vary.

What if I can't pay the tax due when filing late?

File the return even if you can't pay—this stops the failure-to-file penalty, which is typically much higher than the failure-to-pay penalty. Then immediately apply for an installment agreement using Form 9465 or the IRS online payment agreement system (IRS.gov/forms-pubs/about-form-9465).

How do I know if my REIT still qualifies after filing late?

Late filing doesn't affect REIT qualification tests, which are based on income sources, asset composition, and distribution requirements during the tax year itself. Review the 95%/75% income tests and asset diversification requirements to confirm ongoing qualification.

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