Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 137

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 137
---
 generally will not be eligible for the 20% rate on qualified dividend income.

As a result, our ordinary REIT dividends will
be taxed at the higher tax rate applicable to ordinary income. Beginning in taxable years on or after January 1, 2018 and before
January 1, 2026, non-corporate U.S. stockholders will be entitled to deduct 20% of ordinary REIT dividends they receive. In combination
with the 37% maximum rate applicable to non-corporate U.S. stockholders in such years, ordinary REIT dividends are subject to a maximum
tax rate of 29.6%, as compared with the 39.6% rate applicable in taxable years beginning before January 1, 2018. Pursuant to Treasury
Regulations finalized in 2020, in order for a dividend paid by a REIT to be eligible to be eligible for this reduced tax rate, a non-corporate
U.S. stockholder must meet two holding period-related requirements. First, the U.S. stockholder must hold the REIT stock for a minimum
of 46 days during the 91-day period that begins 45 days before the date on which the REIT stock becomes ex-dividend with respect to the
dividend. Second, the qualifying portion of the REIT dividend is reduced to the extent that the U.S. stockholder is under an obligation
(whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related
property. Prospective investors should consult their tax advisors concerning the applicability of these rules and any limitations
on the ability to deduct all or a portion of dividends received on our securities.

<div align='center'>45</div>

In addition, the 20% tax rate for qualified dividend
income will apply to our ordinary REIT dividends (i) attributable to dividends received by us from certain non-REIT corporations
(e.g., dividends from any domestic TRSs), (ii) to the extent attributable to income upon which we have paid corporate income tax
(e.g., to the extent that we distribute less than 100% of our taxable income) and (iii) attributable to income in the prior taxable
year from the sales of “built-in gain” property acquired by us from C corporations in carryover basis transactions (less
the amount of corporate tax on such income) with respect to such built-in gain. In general, to qualify for the reduced tax rate