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Home/News Feed/Holding REITs and BDCs in taxable accounts costs top-bracket earners $22K+ annually in taxes versus Roth accounts.
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Holding REITs and BDCs in taxable accounts costs top-bracket earners $22K+ annually in taxes versus Roth accounts.

Market News
04 Jun 2026
24/7 Wall Street
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Bullish
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Top federal tax bracket earners face a $22,200 annual tax hit on $60,000 of ordinary dividend income from REITs and BDCs held in taxable accounts, compared to no tax in Roth accounts. This tax drag compounds significantly over time, potentially costing $280,000 over 10 years and $730,000 over 20 years when reinvested at 5%. Qualified dividend payers like Johnson & Johnson and Coca-Cola have a smaller tax impact but still benefit from Roth placement. Investors should prioritize holding ordinary-income payers like Realty Income and Main Street Capital in Roth accounts to maximize tax efficiency and consider Roth conversions to reduce taxable income in high brackets.

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