Today we are continuing our series of frequently asked questions in regards to syndication, especially from new investors. In this segment, we are going to focus on tax benefits and risks especially when it comes to investing in apartments and also how we mitigate risks.
First, we will cover the tax benefits, which is what people often love about real estate. The expectation is that as a limited partner investor the benefits to the partnership from a standpoint of tax deductions include property tax, interest on the mortgage debt, and depreciation. Those are the main opportunities to reduce your tax expense. We also have an opportunity for refinancing, which is considered a return on your equity, not a taxable event. Then lastly, on sale since we typically hold these assets for more than one year, you qualify for long-term capital gains on the profit from that sale.
In addition, with multi-family apartment options and the operators that we work with we are able to do 1031 exchange, which means your original investment plus profit if rolled into another opportunity can allow you to defer your long-term capital gains tax.
Watch today’s video and find out more reasons why our investors are pleasantly surprised when it comes to tax time.
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