Redwood Trust Announces Dividend Distribution Tax Information for 2022

Redwood Trust, Inc. (NYSE: RWT, “Redwood” or the “Company”), a leader in expanding access to housing for homebuyers and renters, today announced tax information regarding its dividend distributions for 2022.

Shareholders should check the tax statements they receive from their brokerage firms to confirm the Redwood dividend distribution information reported in those statements conforms to the information reported here. Set forth in this press release are Redwood's expectations with respect to the treatment of the Company’s 2022 dividend distributions for federal income tax purposes. Shareholders should consult their tax advisors to determine the amount of taxes that should be paid on Redwood's dividend distributions for federal, state, and other income tax purposes.

All common stock dividend distributions paid during 2022 are reportable on shareholders' 2022 federal income tax returns, including the four quarterly regular dividend distributions of $0.23 per share for the first, second, third, and fourth quarters. Thus, for 2022, Redwood shareholders that held stock for this entire period should report a total of $0.92 per share of common stock dividend distributions for federal income tax purposes.

Under the federal income tax rules applicable to real estate investment trusts (“REITs”), Redwood's 2022 dividend distributions are expected to be characterized for income tax purposes as 58% ordinary income and 42% qualified dividends. None of Redwood's 2022 dividend distributions are expected to be characterized for federal income tax purposes as a return of capital or long-term capital gain dividends.

Due to Redwood’s classification as a REIT, the portion of the 2022 dividend distributions that can be characterized as qualified dividends is limited to Redwood’s qualified dividend income for the year. The amount characterized as ordinary income under the applicable federal income tax rules are generally taxed at full ordinary income tax rates.

Individual taxpayers may generally take a deduction from taxable income of 20% of their ordinary REIT dividends. This deduction does not apply to REIT dividends classified as return of capital, qualified dividends, or long-term capital gain dividends.

For shareholders that are corporations, Redwood's dividend distributions are not generally eligible for the corporate dividends-received deduction or the 20% ordinary REIT dividend deduction.

The table below provides more detailed information on the expected federal income tax characterization for each of Redwood's common stock dividend distributions that were paid for 2022.

Common Stock (CUSIP 758075 40 2)