Redwood Trust Announces Tax Information for 2024 Dividend Distributions

Redwood Trust, Inc. recently disclosed details regarding the tax implications of its dividend distributions for the year 2024. The company, a prominent player in expanding housing access for both homebuyers and renters, provided insights on the tax treatment of its dividend distributions for the mentioned period.

Shareholders are advised to cross-reference the dividend distribution information provided in their brokerage firms’ tax statements with the details outlined here. According to the released information, Redwood Trust anticipates the tax treatment of its 2024 dividend distributions for federal income tax purposes as follows:

For common stock dividend distributions throughout 2024, Redwood expects 6% to be classified as ordinary income (Section 199A), 44% as qualified dividends, and 50% as return of capital under the federal income tax rules applicable to real estate investment trusts (REITs).

Regarding preferred stock dividend distributions made in April, July, and October 2024, as well as January 2025, Redwood projects 11% to be categorized as ordinary income (Section 199A) and 89% as qualified dividends for federal income tax purposes.

In compliance with its status as a REIT, Redwood indicates that the portion of dividend distributions characterized as qualified dividends for both common and preferred stocks is restricted to the qualified dividend income earned in the respective year. Income classified as ordinary under federal income tax rules is usually subjected to standard ordinary income tax rates.

Individual taxpayers may qualify for a deduction of 20% of their ordinary income REIT dividends under section 199A, provided they meet specific holding period requirements. However, this deduction does not apply to various types of REIT dividends, including those deemed as a return of capital, qualified dividends, or capital gain dividends.

Unlike individual taxpayers, corporations are generally not eligible for the 20% ordinary REIT dividend deduction or the corporate dividends-received deduction concerning Redwood’s dividend distributions.

The document further presents detailed information on the federal income tax characterization of both common and preferred stock dividend distributions attributed to 2024, specifying record dates, payable dates, total distribution per share, and allocations across various categories such as ordinary dividends, qualified dividends, and non-dividend distributions.

Notably, Redwood clarifies that none of its 2024 common or preferred dividend distributions is expected to comprise unrelated business taxable income (UBTI), an important consideration for certain tax-exempt investors necessitating specialized tax reporting.

Regarding further inquiries, shareholders are encouraged to seek guidance from their tax advisors for clarity on tax-related matters.

About Redwood Trust:
Redwood Trust, Inc. (NYSE: RWT) is a specialty finance company focused on various segments of housing credit, providing liquidity to underserved segments of the U.S. housing market. The company operates through Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking and Investment Portfolio segments, aiming to offer attractive returns to shareholders through earnings, dividends, and technological innovation while ensuring risk-minded growth.

The release of this tax information is in compliance with Redwood Trust’s commitment to transparency and regulatory compliance, aimed at empowering shareholders with necessary information for tax planning.

For Media Inquiries:
Kaitlyn Mauritz
SVP, Head of Investor Relations
Phone: 866-269-4976
Email: [email protected].

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Redwood Trust’s 8K filing here.

About Redwood Trust

Redwood Trust, Inc, together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. The Residential Consumer Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio.