Why people prefer going the syndication route in real estate

24 Replies

The main reason why investors prefer real estate syndication is access and time to deal flow. Not everyone has time to search for deals and underwrite hundreds of properties to find the perfect property. Instead they rely on real estate and investment firms who take the time to find deals, underwrite and have knowledge about the property. With getting involved in real estate syndication, investors have access to deal flow and the ability to invest in real estate without the hassle of finding the deal and executing the business plan and doing the asset management.

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Not only are investors brought deals to their inbox, but often they are off-market deals. And where it further improves is the investor is getting in pre-value add, or pre ARV, so they get to share in the forced appreciation and, therefore, the upside. Many discover that finding and securing these large deals is a challenge while participating in syndications allows them to enjoy the benefits of real estate without the headaches of actually being a landlord.

Many investors want to enjoy the many benefits of commercial real estate without the headache and liabilities. Another issue is the many barriers to entry to get into commercial real estate. They can be daunting, it doesn’t make sense for most people to tackle these, especially if they have a full-time career for are enjoying retirement.

One example is debt. It’s very hard for most individual investors to qualify for millions of dollars in debt. You need experience, liquidity, and high net worth.  The same barriers apply when trying to get a broker or seller to take you seriously.

And of course it also takes an experienced team to operate these types of deals.

I’ve been in real estate for over two decades and have written a few books on real estate investing. But I would never try to buy and operate an asset on my own at this point. I just don’t have the expertise or the team.  This is why I love investing with experts.

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Originally posted by @AJ Shepard :

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Perhaps you could have underlined the words “until the property is sold” and added a fine print that when the property is eventually sold the taxes due will be more than the taxes saved because depreciation recapture is taxed at a higher rate than long term capital gains rate 😏

Here is a an example of someone paying thousands of dollars in tax preparation each year in order to record the paper losses noted in K-1.

https://www.biggerpockets.com/...

My guess is paper losses were significant because the GP did cost seg to solely benefit themselves and the middlemen - most LPs are busy professionals, not real estate professionals, hence cost seg doesn’t benefit them but their money is nevertheless used by the GP for GP’s tax benefit. If these significant losses are not recorded in LP’s tax return then upon exit (when the property is sold) the LPs will pay more taxes than due because depreciation recapture will apply even if losses were not recorded in prior years’ tax return. And if the losses were recorded and used/captured during the hold period then the LPs will still pay more taxes than saved because depreciation recapture is taxed at a higher rate than long term capital gains rate.

I don’t think real estate investing offers any unique tax benefits (except for people with REP status who are slogging their a$$es harder than W2 employees, which doesn’t necessarily mean they are earning more), though it definitely offers some unique tax disadvantages. But highlighting those will be conflict of interest for many on biggerpockets 😉

Originally posted by @Tushar P. :
Originally posted by @AJ Shepard:

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Perhaps you could have underlined the words “until the property is sold” and added a fine print that when the property is eventually sold the taxes due will be more than the taxes saved because depreciation recapture is taxed at a higher rate than long term capital gains rate 😏

Here is a an example of someone paying thousands of dollars in tax preparation each year in order to record the paper losses noted in K-1.

https://www.biggerpockets.com/...

My guess is paper losses were significant because the GP did cost seg to solely benefit themselves and the middlemen - most LPs are busy professionals, not real estate professionals, hence cost seg doesn’t benefit them but their money is nevertheless used by the GP for GP’s tax benefit. If these significant losses are not recorded in LP’s tax return then upon exit (when the property is sold) the LPs will pay more taxes than due because depreciation recapture will apply even if losses were not recorded in prior years’ tax return. And if the losses were recorded and used/captured during the hold period then the LPs will still pay more taxes than saved because depreciation recapture is taxed at a higher rate than long term capital gains rate.

I don’t think real estate investing offers any unique tax benefits (except for people with REP status who are slogging their a$$es harder than W2 employees, which doesn’t necessarily mean they are earning more), though it definitely offers some unique tax disadvantages. But highlighting those will be conflict of interest for many on biggerpockets 😉

I love this post Tushar, but are you sure you're comparing apples to apples? I agree that recapture is higher than LTCG, but the accelerated depreciation would be offsetting ordinary income during the duration of the deal.  The LTCG component does not change with or without recapture. The recapture rate calculation when your ordinary income tax rate is higher than 25% gets extremely complicated.

I agree that folks often overstate the tax benefits of RE. There's a reason why we are able to depreciate our buildings....it's because cap expenses take a huge bite!

Originally posted by @Tony Kim :
Originally posted by @Tushar P.:
Originally posted by @AJ Shepard:

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Perhaps you could have underlined the words “until the property is sold” and added a fine print that when the property is eventually sold the taxes due will be more than the taxes saved because depreciation recapture is taxed at a higher rate than long term capital gains rate 😏

Here is a an example of someone paying thousands of dollars in tax preparation each year in order to record the paper losses noted in K-1.

https://www.biggerpockets.com/...

My guess is paper losses were significant because the GP did cost seg to solely benefit themselves and the middlemen - most LPs are busy professionals, not real estate professionals, hence cost seg doesn’t benefit them but their money is nevertheless used by the GP for GP’s tax benefit. If these significant losses are not recorded in LP’s tax return then upon exit (when the property is sold) the LPs will pay more taxes than due because depreciation recapture will apply even if losses were not recorded in prior years’ tax return. And if the losses were recorded and used/captured during the hold period then the LPs will still pay more taxes than saved because depreciation recapture is taxed at a higher rate than long term capital gains rate.

I don’t think real estate investing offers any unique tax benefits (except for people with REP status who are slogging their a$$es harder than W2 employees, which doesn’t necessarily mean they are earning more), though it definitely offers some unique tax disadvantages. But highlighting those will be conflict of interest for many on biggerpockets 😉

I love this post Tushar, but are you sure you're comparing apples to apples? I agree that recapture is higher than LTCG, but the accelerated depreciation would be offsetting ordinary income during the duration of the deal.  The LTCG component does not change with or without recapture. The recapture rate calculation when your ordinary income tax rate is higher than 25% gets extremely complicated.

I agree that folks often overstate the tax benefits of RE. There's a reason why we are able to depreciate our buildings....it's because cap expenses take a huge bite!

I think this was discussed in another post, that distributions during the hold period are treated as ordinary dividends generally for REITs, while for syndications they are treated as qualified dividends (taxed at ltcg rate). So for syndications the accelerated depreciation would be offsetting qualified dividends rather than ordinary.

But since the distributions form a small fraction of the total gains from the syndication (most of the gains are ltcg), chances are high that accelerated depreciation from the next deal will offset a big chunk of ltcg from the exited deal, irrespective of whether the distributions during the hold period were treated as ordinary or qualified dividends.

I agree that most people don’t look at depreciation as a loan/subsidy by the govt, maybe because their ego doesn’t allow them to admit that their investment would not produce competitive yields without subsidies or maybe because they don’t understand the entire value chain.

Originally posted by @Tushar P. :
Originally posted by @Tony Kim:
Originally posted by @Tushar P.:
Originally posted by @AJ Shepard:

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Perhaps you could have underlined the words “until the property is sold” and added a fine print that when the property is eventually sold the taxes due will be more than the taxes saved because depreciation recapture is taxed at a higher rate than long term capital gains rate 😏

Here is a an example of someone paying thousands of dollars in tax preparation each year in order to record the paper losses noted in K-1.

https://www.biggerpockets.com/...

My guess is paper losses were significant because the GP did cost seg to solely benefit themselves and the middlemen - most LPs are busy professionals, not real estate professionals, hence cost seg doesn’t benefit them but their money is nevertheless used by the GP for GP’s tax benefit. If these significant losses are not recorded in LP’s tax return then upon exit (when the property is sold) the LPs will pay more taxes than due because depreciation recapture will apply even if losses were not recorded in prior years’ tax return. And if the losses were recorded and used/captured during the hold period then the LPs will still pay more taxes than saved because depreciation recapture is taxed at a higher rate than long term capital gains rate.

I don’t think real estate investing offers any unique tax benefits (except for people with REP status who are slogging their a$$es harder than W2 employees, which doesn’t necessarily mean they are earning more), though it definitely offers some unique tax disadvantages. But highlighting those will be conflict of interest for many on biggerpockets 😉

I love this post Tushar, but are you sure you're comparing apples to apples? I agree that recapture is higher than LTCG, but the accelerated depreciation would be offsetting ordinary income during the duration of the deal.  The LTCG component does not change with or without recapture. The recapture rate calculation when your ordinary income tax rate is higher than 25% gets extremely complicated.

I agree that folks often overstate the tax benefits of RE. There's a reason why we are able to depreciate our buildings....it's because cap expenses take a huge bite!

I think this was discussed in another post, that distributions during the hold period are treated as ordinary dividends generally for REITs, while for syndications they are treated as qualified dividends (taxed at ltcg rate). So for syndications the accelerated depreciation would be offsetting qualified dividends rather than ordinary.

But since the distributions form a small fraction of the total gains from the syndication (most of the gains are ltcg), chances are high that accelerated depreciation from the next deal will offset a big chunk of ltcg from the exited deal, irrespective of whether the distributions during the hold period were treated as ordinary or qualified dividends.

I agree that most people don’t look at depreciation as a loan/subsidy by the govt, maybe because their ego doesn’t allow them to admit that their investment would not produce competitive yields without subsidies or maybe because they don’t understand the entire value chain.

Got it. So I guess it varies depending on the type of syndication in which you are invested. In all but one of my syndications, the K-1 indicated either ordinary income or net rental income which would mean the accel dep offset my ordinary income. The only one in which the K-1 indicated dividend income was in an HML fund that converted to public REIT, which was a grand-slam for the investors till Covid took a little bit of luster off the shine.

@William Costello investing in syndications is really a great option for most folks that includes lower risks than investing all by yourself, but with risks comes rewards. The deals that I've found and worked myself have given me much better returns than offered by most syndications - especially when I have very little of my own money down (the returns can be infinite with no money down). Also, I am able to use the tax benefits of owning real estate - especially depreciation - to make my dollars go further. There are plenty of risks, but a lot of those risks can be minimized through education (learning from others' mistakes) and partnering with more experienced investors. Cheers!

Originally posted by @Tony Kim :
Originally posted by @Tushar P.:
Originally posted by @Tony Kim:
Originally posted by @Tushar P.:
Originally posted by @AJ Shepard:

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Perhaps you could have underlined the words “until the property is sold” and added a fine print that when the property is eventually sold the taxes due will be more than the taxes saved because depreciation recapture is taxed at a higher rate than long term capital gains rate 😏

Here is a an example of someone paying thousands of dollars in tax preparation each year in order to record the paper losses noted in K-1.

https://www.biggerpockets.com/...

My guess is paper losses were significant because the GP did cost seg to solely benefit themselves and the middlemen - most LPs are busy professionals, not real estate professionals, hence cost seg doesn’t benefit them but their money is nevertheless used by the GP for GP’s tax benefit. If these significant losses are not recorded in LP’s tax return then upon exit (when the property is sold) the LPs will pay more taxes than due because depreciation recapture will apply even if losses were not recorded in prior years’ tax return. And if the losses were recorded and used/captured during the hold period then the LPs will still pay more taxes than saved because depreciation recapture is taxed at a higher rate than long term capital gains rate.

I don’t think real estate investing offers any unique tax benefits (except for people with REP status who are slogging their a$$es harder than W2 employees, which doesn’t necessarily mean they are earning more), though it definitely offers some unique tax disadvantages. But highlighting those will be conflict of interest for many on biggerpockets 😉

I love this post Tushar, but are you sure you're comparing apples to apples? I agree that recapture is higher than LTCG, but the accelerated depreciation would be offsetting ordinary income during the duration of the deal.  The LTCG component does not change with or without recapture. The recapture rate calculation when your ordinary income tax rate is higher than 25% gets extremely complicated.

I agree that folks often overstate the tax benefits of RE. There's a reason why we are able to depreciate our buildings....it's because cap expenses take a huge bite!

I think this was discussed in another post, that distributions during the hold period are treated as ordinary dividends generally for REITs, while for syndications they are treated as qualified dividends (taxed at ltcg rate). So for syndications the accelerated depreciation would be offsetting qualified dividends rather than ordinary.

But since the distributions form a small fraction of the total gains from the syndication (most of the gains are ltcg), chances are high that accelerated depreciation from the next deal will offset a big chunk of ltcg from the exited deal, irrespective of whether the distributions during the hold period were treated as ordinary or qualified dividends.

I agree that most people don’t look at depreciation as a loan/subsidy by the govt, maybe because their ego doesn’t allow them to admit that their investment would not produce competitive yields without subsidies or maybe because they don’t understand the entire value chain.

Got it. So I guess it varies depending on the type of syndication in which you are invested. In all but one of my syndications, the K-1 indicated either ordinary income or net rental income which would mean the accel dep offset my ordinary income. The only one in which the K-1 indicated dividend income was in an HML fund that converted to public REIT, which was a grand-slam for the investors till Covid took a little bit of luster off the shine.

Yes, the distributions may get treated as qualified dividends depending on how the GPs manage the deal. I wonder if the GPs even care about that - I think they are generally more interested in talking about what benefits them (i.e. cost seg). I’ve come across only one GP so far who explained how cost seg will benefit him but not the LPs 🙂

I wonder if your suspended losses (generated via cost seg) were higher or lower than the ordinary income. If lower then all good. But if higher (likely because cost seg losses are much higher than few years of distributions) then there will be a good portion of losses suspended after offsetting the ordinary income, leading to ltcg being offsetted by the suspended losses upon deal exit. I am assuming there may be studies/research on the actual impact of such things by institutional money managers. I need to find those rather than assume what the potential impact on taxes.

Regarding reits, my understanding is that dividend distributions from reits are always taxed at ordinary rate, which is the reason it is advised to be held in tax efficient accounts (e.g. 401k, IRA). I'm trying to get rid of the reits from my brokerage accounts for that reason. Regarding stock dividends, almost 100% of the dividends I receive every year are qualified dividends (taxed at ltcg rate), as noted in 1099-Bs.

All good points. To summarize, investors choose syndication over alternative investments due to :

  • Lower risk due to experienced team
  • Access to larger deals previously unattainable
  • Lack of time to manage a deal personally
  • Access to large depreciation tax benefits due to cost segregation studies

I think these are some of the more popular reasons I hear. Return is often a secondary consideration to the above.

Now why do investors look to manage syndications or be a GP? That is another question altogether. :)

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Originally posted by @Chris Levarek :

All good points. To summarize, investors choose syndication over alternative investments due to :

  • Lower risk due to experienced team
  • Access to larger deals previously unattainable
  • Lack of time to manage a deal personally
  • Access to large depreciation tax benefits due to cost segregation studies

I think these are some of the more popular reasons I hear. Return is often a secondary consideration to the above.

Now why do investors look to manage syndications or be a GP? That is another question altogether. :)

 I think the tax advantages are the #1. A buddy of mine told me basically the money you put into the syndicate as a GP or LP, you can essentially write off 75% of that thanks to the pass through depreciation. I'm trying to find more info on the internet about it but that alone has me ready to pull the trigger on one. 

@William Costello I would say be wary of whatever any GP markets, especially the tax benefits. Check the forums and educate yourself first.

@Peter T. I suggest educate yourself about depreciation recapture and try to understand the entire value chain when it comes to tax benefits from syndications. Perhaps you didn’t gather anything from the exchange between me and Tony. Check the forums for posts like below:

https://www.biggerpockets.com/...

Syndications are best suited for investors seeking freedom of time, plus leverage of a sponsor's experience, which can result in many benefits, including:

  • Access to deals: A good sponsor will have a proven way to find deals that the general public never knows about.
  • Lower required investment: Rather than having to fund the purchase of a whole property, most syndications allow investors to invest a smaller portion of the capital required.
  • Low time commitment: The sponsor handles all the day-to-day work.
  • Lower risk: Investors can leverage the sponsor's experience to avoid costly mistakes.
  • Economy of Scale: Sponsors tend to buy larger properties. Larger properties create economies of scale that can result in higher yields and more stable cash flow.
  • Returns: It's not uncommon for investors to make a better return being passive than they would have if they took the plunge themselves.
  • Direct access: Unlike traditional investments, passive real estate investment offers direct communication with the people responsible for the performance of your investment and the properties themselves.
  • Tax benefits: Investors can receive significant tax advantages that come with ownership of real estate, such as depreciation. (keep in mind, some asset classes are more tax efficient than others, such as my personal favorite, mobile home parks)
  • Retirement-account friendly: Passive investments can be a great fit for retirement accounts because they are hands off and don't violate rules related to prohibited transactions and self-dealing.
  • Fund Diversification: Similar to the way a mutual fund works, a real estate fund diversifies the investment across a group of properties instead of a single property. This can result in reduced risk and blended performance across all the properties in the fund, and can also create the opportunity for compounding returns by reinvesting cash flow distributions back into the fund.

With all that said, passive investors are exposed to both deal risk and sponsor risk. Deal risk can be mitigated by choosing a sponsor who has a track record of good deals, and can be further mitigated by investing in a fund with a sponsor with a good track record. 

Sponsor risk can be mitigated by doing a good job of vetting and (IMHO) is the most important step in evaluating any passive investment. As you connect with sponsors that resonate with you, take the time to develop a relationship with them. Trusting the sponsor will be paramount to you sleeping at night, and I can't stress that enough. It does no good to place capital with a sponsor who has an attractive deal to find out later they can't be trusted. 

Making sense of the deal and understanding track record is important, of course, but I believe you should develop TRUST before you invest. Developing that trust with someone you don't know may seem like a challenge, but if you approach it correctly, you should be able to achieve a pretty solid foundation before you engage.

One way to approach this is to look for investments with professional administration. In that environment, most of a passive investor’s concerns related to honesty, transparency, accuracy, and timeliness are managed by the administrator who is a neutral party. It’s like having a referee that is overseeing the investment to ensure that the sponsor continues to do what they promised.

If that is not available, another approach is to talk to investors who have had an experience with the sponsor already. If the sponsor is willing to connect you, there is nothing that replaces a conversation with someone who has already built that trust with the sponsor over time.

Also, be careful not to get blinded by just the projected returns. Your overall experience in a passive investment involves much more than the returns, so when you find a sponsor you like, do yourself a favor and get clear on what your experience will be like AFTER you have invested.

Find out how existing investors' overall experience has been. How accessible is the sponsor? If you have a concern, will you be able to reach them? Do they return calls? Are they transparent, even when they run into a problem? Does the sponsor have a communication plan? How often will you receive reporting? How are they delivered? What will the reports cover? How often will you see financials? When will you receive tax documents? How often will you receive distributions? In the sponsor's history, have all those things been delivered on time?

If the investment has professional administration, you will have access to the answers to those questions, but also much deeper vetting of the sponsor that will include personal background checks covering things like bankruptcy, judgements, litigation, criminal history, and other red flags related to a sponsor that you would want to avoid, plus other items that investors rarely consider like ensuring that the properties are actually titled correctly, property taxes are paid, and insurance is current.

The purpose of investing passively is to leverage a sponsor's time, expertise, and ability to source great deals, but your overall experience will be driven by the answers to all the questions above, so make sure to cover that in your vetting process. Otherwise, any return you could make simply may not be worth the risk, or will cause you years of sleepless nights.

All the best,

Jack

There are many benefits to syndication, as we all know sometimes investing in real estate can be risky. But investing in a real estate syndication will allow you to share the risks with other real estate investors rather then carrying the risk alone. 

@Tushar P. nice point that you raise but why couldn't someone take the gains from their syndication and either roll it into another syndication or roll it into a 1031 exchange for their own commercial property or 2-4 unit portfolio. I don't see why you couldn't do that. 

@Peter T. Typically unless the acquisition was using a TIC (Tenant-In-Common), the property is purchased under an LLC to which investors have ownership shares. As this is the case, the sale of the property is for the LLC and the gains are then distributed to investors. In a 1031, it needs to be like for like and the sale demonstrating owner's name. In this case that doesn't happen, so a 1031 is not available.

However, there are alternative methods to this. Already by exiting an investment in year 3-5 for example, those gains are now long term gains which are taxed different. Investors can also choose to invest in the same year as exit of the old property, whereby the new property investment again captures 100% bonus depreciation thus offsetting certain gains or income in the same year.

Deferment is the name of the game.

@William Costello

 Back in the day syndications were an investment strategy reserved for the ultra-wealthy and well-connected. Today, they are accessible to the savvy, in-the-know investor. People prefer going the syndication route also because they can utilize and leverage other peoples money and knowledge to grow their business as well. 

Originally posted by @Tushar P. :
Originally posted by @Tony Kim:
Originally posted by @Tushar P.:
Originally posted by @Tony Kim:
Originally posted by @Tushar P.:
Originally posted by @AJ Shepard:

In addition to that, Syndication allows you to compound your money for years without paying taxes until the property is sold while generating a positive cash flow, so investments will be extremely tax efficient!

Perhaps you could have underlined the words “until the property is sold” and added a fine print that when the property is eventually sold the taxes due will be more than the taxes saved because depreciation recapture is taxed at a higher rate than long term capital gains rate 😏

Here is a an example of someone paying thousands of dollars in tax preparation each year in order to record the paper losses noted in K-1.

https://www.biggerpockets.com/...

My guess is paper losses were significant because the GP did cost seg to solely benefit themselves and the middlemen - most LPs are busy professionals, not real estate professionals, hence cost seg doesn’t benefit them but their money is nevertheless used by the GP for GP’s tax benefit. If these significant losses are not recorded in LP’s tax return then upon exit (when the property is sold) the LPs will pay more taxes than due because depreciation recapture will apply even if losses were not recorded in prior years’ tax return. And if the losses were recorded and used/captured during the hold period then the LPs will still pay more taxes than saved because depreciation recapture is taxed at a higher rate than long term capital gains rate.

I don’t think real estate investing offers any unique tax benefits (except for people with REP status who are slogging their a$$es harder than W2 employees, which doesn’t necessarily mean they are earning more), though it definitely offers some unique tax disadvantages. But highlighting those will be conflict of interest for many on biggerpockets 😉

I love this post Tushar, but are you sure you're comparing apples to apples? I agree that recapture is higher than LTCG, but the accelerated depreciation would be offsetting ordinary income during the duration of the deal.  The LTCG component does not change with or without recapture. The recapture rate calculation when your ordinary income tax rate is higher than 25% gets extremely complicated.

I agree that folks often overstate the tax benefits of RE. There's a reason why we are able to depreciate our buildings....it's because cap expenses take a huge bite!

I think this was discussed in another post, that distributions during the hold period are treated as ordinary dividends generally for REITs, while for syndications they are treated as qualified dividends (taxed at ltcg rate). So for syndications the accelerated depreciation would be offsetting qualified dividends rather than ordinary.

But since the distributions form a small fraction of the total gains from the syndication (most of the gains are ltcg), chances are high that accelerated depreciation from the next deal will offset a big chunk of ltcg from the exited deal, irrespective of whether the distributions during the hold period were treated as ordinary or qualified dividends.

I agree that most people don’t look at depreciation as a loan/subsidy by the govt, maybe because their ego doesn’t allow them to admit that their investment would not produce competitive yields without subsidies or maybe because they don’t understand the entire value chain.

Got it. So I guess it varies depending on the type of syndication in which you are invested. In all but one of my syndications, the K-1 indicated either ordinary income or net rental income which would mean the accel dep offset my ordinary income. The only one in which the K-1 indicated dividend income was in an HML fund that converted to public REIT, which was a grand-slam for the investors till Covid took a little bit of luster off the shine.

Yes, the distributions may get treated as qualified dividends depending on how the GPs manage the deal. I wonder if the GPs even care about that - I think they are generally more interested in talking about what benefits them (i.e. cost seg). I’ve come across only one GP so far who explained how cost seg will benefit him but not the LPs 🙂

I wonder if your suspended losses (generated via cost seg) were higher or lower than the ordinary income. If lower then all good. But if higher (likely because cost seg losses are much higher than few years of distributions) then there will be a good portion of losses suspended after offsetting the ordinary income, leading to ltcg being offsetted by the suspended losses upon deal exit. I am assuming there may be studies/research on the actual impact of such things by institutional money managers. I need to find those rather than assume what the potential impact on taxes.

Regarding reits, my understanding is that dividend distributions from reits are always taxed at ordinary rate, which is the reason it is advised to be held in tax efficient accounts (e.g. 401k, IRA). I'm trying to get rid of the reits from my brokerage accounts for that reason. Regarding stock dividends, almost 100% of the dividends I receive every year are qualified dividends (taxed at ltcg rate), as noted in 1099-Bs.

Most syndications are not set up as REIT's. Therefore the distributions are not considered dividends.