What are the Tax Advantages
Tax advantages can vary depending on the deal structure. Real estate crowdfunding can offer the following advantages:
No self-employment taxes. Since rental real estate is a passive activity there are no employment taxes on any profits you make from your investment.
Favorable long-term capital gains rates. For equity deals, capital gains are usually taxed at a rate of 15% (with certain limitations) for investments that have been owned or held for longer than 1 year.
Favorable depreciation deductions. As discussed further later, even though investors may receive cash distributions, there will be depreciation deductions that will ultimately reduce the taxable income that is passed through to the investor.
Passive activity rules. Equity crowdfunding deals will generally generate passive income that will be taxed at the taxpayer’s marginal tax rate. But this income can also be used to offset passive losses. With a syndication generating passive income, this can allow the investor to “free up” these passive losses and use them to offset the income from the syndication.
Tax advantages can vary depending on the deal structure. Real estate crowdfunding can offer the following advantages:
No self-employment taxes. Since rental real estate is a passive activity there are no employment taxes on any profits you make from your investment.
Favorable long-term capital gains rates. For equity deals, capital gains are usually taxed at a rate of 15% (with certain limitations) for investments that have been owned or held for longer than 1 year.
Favorable depreciation deductions. As discussed further later, even though investors may receive cash distributions, there will be depreciation deductions that will ultimately reduce the taxable income that is passed through to the investor.
Passive activity rules. Equity crowdfunding deals will generally generate passive income that will be taxed at the taxpayer’s marginal tax rate. But this income can also be used to offset passive losses. With a syndication generating passive income, this can allow the investor to “free up” these passive losses and use them to offset the income from the syndication.
|
© Copyright 2018
All rights reserved |
The information on this website does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information contained on this website is a recommendation to invest in any securities. By using this website, you accept our Terms of Service and Privacy Policy. Past performance is no guarantee of future results. Any historical returns, expected returns or probability projections may not reflect actual future performance. All investments involve risk and may result in loss. Full Disclosure.
|