7 Best Real Estate Syndication Tax Benefits

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Real estate can be a great alternative asset class for investors of all stripes — accumulators, early retirees, regular retirees, trust fund beneficiaries, and more. But the late-night calls for clogged toilets and water leaks scare some folks away from active real estate investing.

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There is more to passive real estate, though, than your nearest REIT – for accredited investors, there are syndications, and they bring with them not only passive income but also some special tax benefits, too. ESI Money delves into these tax benefits of syndications.

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As most of you know, I sold my rental properties last year and invested a good portion of those proceeds into real estate syndication deals. At the time of this writing, here’s what my real estate syndication portfolio looks like (including my private loans which are very similar in nature to syndications):

– 10 different deals — five are multi-family apartment complexes, two are land, one is storage fund, one is a mobile home park fund, and one is a multi-family fund – 7 different syndicators — I have two deals with one syndicator and three with another; all the others are one deal only. – Total invested: $1,025,000 – Three are interest-only (then return of principal) while the other seven are interest plus appreciation at sale

– Eight are long-term deals (5-7 years) and two are year-only deals – Three deals are in the same market but the other seven are all in different markets across the US (many of them are in multiple markets — for example, the funds cover many different markets even within themselves). – Annual income: $75,000

As you can see, my strategy has been to spread out the risk and diversify by: – Syndicator – Type of real estate – Market – Time frame – Amount of money in any given deal

In addition, this money is “extra” for me. If it all went away tomorrow, my financial life would not change one bit. That said, I don’t want that to happen and it would be painful, but I am playing with the house’s money at this point.

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