Which U.S. law created real estate investment trusts in 1960?

The Real Estate Investment Trust Act of 1960 created real estate investment trusts, or REITs, in the United States. The law allowed companies owning income-producing real estate to receive pass-through tax treatment while giving investors a way to participate in property markets through shares.

Before REITs, ordinary investors generally had limited access to large commercial properties such as office buildings, shopping centers, and apartments. The new structure adapted the idea of mutual funds to real estate: a REIT could pool capital, own or finance property, and distribute much of its taxable income to shareholders.

The act did not create a single company or guarantee that every property investment would be profitable. Instead, it established the legal and tax framework for the REIT industry. Modern REITs can specialize in sectors including warehouses, hotels, health-care facilities, data centers, and residential buildings.

REITs are often confused with real-estate operating companies that do not meet REIT requirements. To retain REIT status, a company must satisfy rules covering its assets, income sources, ownership, and distributions.