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Concepts

November 5, 2024

7 min read

Why a Distribution May Be Classified as Return of Capital (and Why That’s a Good Thing)

Have you ever received a distribution from a real estate fund or syndication...

Let’s start by clarifying the difference between cash flow and taxable income. In real estate funds, cash flow represents actual cash generated from sources like rental income or lending activities, but taxable income is often much lower than cash flow because of non-cash deductions—especially depreciation.

Depreciation is a valuable tax tool in real estate. It allows funds to deduct the “wear and tear” on assets from their taxable income without reducing actual cash flow. The result? Funds often have much more cash to distribute than taxable income to report.

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December 6, 2022

3 min video

How To Structure A Real Estate Syndication

In the complex world of real estate syndication, understanding the intricate...

In the complex world of real estate syndication, understanding the intricate structures of Limited Liability Companies (LLCs) is key to maximizing your investment's potential. As a real estate syndicator or investor, grasping the nuances of these LLCs can provide significant advantages, from tax benefits to streamlined management. Let's break down the four critical LLCs commonly used in real estate syndication and their roles in the investment process.

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