Syndication and taxes

[Duke Giordano]

Hey Guys,

Quick few questions

1 If I invest in a real estate syndication as a limited partner and I was given bonus depreciation year one where I had a $70,000 loss on 100k investment at the time of sale how are the gains calculated taking into consideration depreciation recapture (say 8% Pref yearly).

2. if there is evidence of any capital gains can I use a new syndication investment (not a 1031) in another real estate syndication that also gives me a bonus depreciation/losses that same year to offset those Capitol gains?

[Michael Skoczylas]

It would depend on your personal tax situation. For the most part you are correct that the new depreciation may offset some or all of the gain from your sale, but it may or may not cover all of it, and depending on your tax classification, it may not work. The best way to ensure that you aren't paying the tax man in the year of sale is a 1031; but not always easy as an LP in a syndication.