Real Estate Syndication Long Term Capital Gains Question

[Evan DiLeonardi]

I'm looking at investing in a RE syndication project that is run through a funding LLC. What's been explained to me is that I am investing into the funding company LLC, who will then pay me out and issue me a K1 tax form.

The project runs 14 months in length, however, I would be coming in with only 11 months remaining on the project. My assumption was that I would pay short term capital gains taxes on this because my personal investment is under 1 year. The funding LLC lead who I spoke with told me that because the project as a whole doesn't require capital gains taxes (>12 months) then she thinks that is how it will be issued out to their investors. She also told me that the date my investment started personally shows up on the K1 form which made me feel like the opposite of what she thinks is true.

Overall, she told me to consult a CPA to be sure, which I do plan on doing, but I wanted to gauge the Bigger Pocket's community's opinion on it first to see if I'm missing anything obvious.

Thanks!

[Chris Seveney]

@Evan DiLeonardi

It’s based on your investment date - if you invested day before it closed and got money it’s not long term

Of course speak to your cpa

[John Malone]

Quote from @Evan DiLeonardi:

I'm looking at investing in a RE syndication project that is run through a funding LLC. What's been explained to me is that I am investing into the funding company LLC, who will then pay me out and issue me a K1 tax form.

The project runs 14 months in length, however, I would be coming in with only 11 months remaining on the project. My assumption was that I would pay short term capital gains taxes on this because my personal investment is under 1 year. The funding LLC lead who I spoke with told me that because the project as a whole doesn't require capital gains taxes (>12 months) then she thinks that is how it will be issued out to their investors. She also told me that the date my investment started personally shows up on the K1 form which made me feel like the opposite of what she thinks is true.

Overall, she told me to consult a CPA to be sure, which I do plan on doing, but I wanted to gauge the Bigger Pocket's community's opinion on it first to see if I'm missing anything obvious.

Thanks!

 This would be a short term capital gain.  Be careful the K1 is reported correctly (we have seen this type of thing screwed up in the past).  The gain is based on YOUR holding period. 

[Ashish Acharya]

These are blind funds and K-1s that come to you will report the character of the gain. You don't have to worry about the characterization.