Redwood Trust Issues 2025 Dividend Tax Guidance

## Redwood Trust Clarifies 2025 Dividend Tax Implications, Highlighting REIT Structure Benefits

**MILL VALLEY, Calif.** – Redwood Trust, Inc. (NYSE: RWT), a prominent player in expanding housing access for American homebuyers and renters, has issued guidance regarding the tax treatment of its 2025 dividend distributions. The company, which operates as a Real Estate Investment Trust (REIT), detailed the expected breakdown of its common and preferred stock dividends for federal income tax purposes, offering clarity to its shareholder base.

Understanding the tax implications of dividend income is paramount for investors, particularly for those holding REITs, which are subject to specific tax regulations designed to pass through income to shareholders. Redwood Trust’s announcement serves to equip investors and their tax advisors with the necessary information to accurately report their 2025 dividend income.

For the 2025 fiscal year, Redwood Trust anticipates that its common stock dividend distributions will be characterized as follows for federal income tax purposes:
* **39% Ordinary Income (Section 199A):** This portion is generally taxed at ordinary income tax rates but may be eligible for a 20% deduction for individual taxpayers meeting certain holding period requirements.
* **2% Qualified Dividends:** These dividends are subject to lower capital gains tax rates.
* **59% Return of Capital:** This portion typically reduces a shareholder’s cost basis in their stock and is not taxed as income until the stock is sold.

Preferred stock dividend distributions paid across April, July, and October 2025, as well as in January 2026, are also reportable on 2025 tax returns. The anticipated tax characterization for these distributions is:
* **96% Ordinary Income (Section 199A):** Similar to common stock, this portion is generally taxed at ordinary rates and may qualify for the 20% deduction.
* **4% Qualified Dividends:** Subject to preferential tax rates.

It is important to note that due to Redwood Trust’s REIT status, the amount of dividends that can be classified as “qualified dividends” is capped by the company’s own qualified dividend income for the year. Consequently, a significant portion of REIT dividends, particularly ordinary income components, are subject to full ordinary income tax rates.

The Section 199A deduction, often referred to as the “Qualified Business Income” deduction, presents a potential tax advantage for individual investors, allowing them to deduct up to 20% of their ordinary REIT dividends. However, this deduction is not applicable to dividends classified as a return of capital or qualified dividends. For corporate shareholders, Redwood’s dividend distributions generally do not qualify for the dividends-received deduction or the 20% ordinary REIT dividend deduction.

Redwood Trust has provided detailed tables outlining the record and payable dates, total distribution per share, and the specific tax characterization for each common and preferred stock dividend distribution attributable to 2025.

**Common Stock Dividend Distributions (2025)**

| Record Dates | Payable Dates | Total Distribution Per Share | Box 1a: Total Ordinary Dividends | Box 1b: Qualified Dividends | Box 2a: Total Capital Gain Dividends | Box 3: Non-Dividend Distributions | Box 5: Section 199A Dividends |
| :———– | :———— | :————————— | :——————————- | :————————– | :———————————– | :—————————— | :————————– |
| 03/24/2025 | 03/31/2025 | $0.1800 | $0.0735 | $0.0029 | $0.0000 | $0.1065 | $0.0706 |
| 06/23/2025 | 06/30/2025 | $0.1800 | $0.0735 | $0.0029 | $0.0000 | $0.1065 | $0.0706 |
| 09/23/2025 | 09/30/2025 | $0.1800 | $0.0735 | $0.0029 | $0.0000 | $0.1065 | $0.0706 |
| 12/23/2025 | 12/30/2025 | $0.1800 | $0.0735 | $0.0029 | $0.0000 | $0.1065 | $0.0706 |
| **Total** | | **$0.7200** | **$0.2940** | **$0.0116** | **$0.0000** | **$0.4260** | **$0.2824** |

**Preferred Stock Dividend Distributions (2025)**

| Record Dates | Payable Dates | Total Distribution Per Share | Box 1a: Total Ordinary Dividends | Box 1b: Qualified Dividends | Box 2a: Total Capital Gain Dividends | Box 3: Non-Dividend Distributions | Box 5: Section 199A Dividends |
| :———– | :———— | :————————— | :——————————- | :————————– | :———————————– | :—————————— | :————————– |
| 04/01/2025 | 04/15/2025 | $0.6250 | $0.6250 | $0.0247 | $0.0000 | $0.0000 | $0.6003 |
| 07/01/2025 | 07/15/2025 | $0.6250 | $0.6250 | $0.0247 | $0.0000 | $0.0000 | $0.6003 |
| 10/01/2025 | 10/15/2025 | $0.6250 | $0.6250 | $0.0247 | $0.0000 | $0.0000 | $0.6003 |
| 01/01/2026 | 01/15/2026 | $0.6250 | $0.6250 | $0.0247 | $0.0000 | $0.0000 | $0.6003 |
| **Total** | | **$2.5000** | **$2.5000** | **$0.0988** | **$0.0000** | **$0.0000** | **$2.4012** |

The company also confirmed that no portion of its 2025 common or preferred dividend distributions is expected to constitute unrelated business taxable income (UBTI), which is a crucial consideration for tax-exempt investors.

Redwood Trust, a leader in providing liquidity to underserved segments of the U.S. housing market, structures its operations through platforms like Sequoia, Aspire, and CoreVest, complemented by its Redwood Investments portfolio and the venture investing initiative, RWT Horizons®. This strategic approach aims to deliver consistent earnings, dividends, and capital appreciation, underpinned by a commitment to technological innovation.

Shareholders are strongly advised to consult with their personal tax advisors to understand the precise tax implications of these dividend distributions on their individual financial situations.

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**About Redwood Trust**

Redwood Trust, Inc. is a specialty finance company dedicated to enhancing access to housing across the U.S. market. The company operates through distinct housing credit segments, offering liquidity where conventional programs fall short. Redwood Trust delivers tailored housing credit investments to a varied investor base via its robust securitization platforms, whole-loan distribution, joint ventures, and publicly traded shares. Its core business is built around three residential housing-focused operating platforms: Sequoia, Aspire, and CoreVest. The complementary Redwood Investments portfolio largely comprises assets sourced through these platforms. Furthermore, RWT Horizons®, the company’s venture investing arm, supports early-stage companies with direct ties to Redwood’s operational focus. Redwood Trust is internally managed and operates as a real estate investment trust (REIT) for tax purposes, prioritizing attractive shareholder returns through stable earnings, growing dividends, capital appreciation, and a focus on innovation to drive scalable risk management.

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*Forward-Looking Statements: This press release may contain forward-looking statements, including projections regarding the tax treatment of Redwood’s 2025 dividend distributions. These statements are subject to risks and uncertainties, and actual results could differ materially. Investors should refer to Redwood Trust’s filings with the Securities and Exchange Commission for a discussion of potential risks and uncertainties.*