Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 146

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 146
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 qualified dividend income applicable to non-corporate U.S. Holders, including individuals. To the extent that redemption proceeds treated as distributions are in excess of the REIT’s current and accumulated earnings and profits allocable to such Units, these proceeds will be treated first as a tax-free return of capital to a U.S. Holder to the extent of the U.S. Holder’s adjusted tax basis in such Units. This treatment will reduce the U.S. Holder’s adjusted tax basis in such Units by such amount, but not below zero. Redemption proceeds treated as distributions in excess of the REIT’s current and accumulated earnings and profits and in excess of a U.S. Holder’s adjusted tax basis in its Units generally will be taxable as capital gain. Such gain generally will be taxable as long-term capital gain if the shares have been held for more than one year.

Generally, whether a redemption qualifies for sale treatment will depend largely on the total number of Units treated as held by the U.S. Holder (including any Units constructively owned by the U.S. Holder described in the following paragraph) relative to all Units outstanding both before and after such redemption. The Redemption generally will be treated as a sale of the Units (rather than as a corporate distribution) if such redemption (i) is “substantially disproportionate” with respect to the U.S. Holder, (ii) results in a “complete termination” of the U.S. Holder’s interest in the REIT or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully below.

<div align='center'>-90-</div>

In determining whether any of the tests are satisfied, a U.S. Holder generally takes into account not only Units actually owned by the U.S. Holder, but also any Units that are constructively owned by such U.S. Holder. A U.S. Holder may constructively own, in addition to Units owned directly, Units owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder. In order to meet the substantially disproportionate test, the percentage of our outstanding Units actually and constructively owned by the U.S. Holder immediately following the Redemption must, among other requirements, be less than 80% of the percentage of our outstanding Units actually and constructively owned by the U.S. Holder immediately before the Redemption. There will be a complete termination of a U.S. Holder’s interest if either (i