Depreciation recapture when layering syndications

[Jacob Rosenkranz]

If one were to invest in a new syndication every year to offset the depreciation recapture against the previous investment, as I've seen referred to as "layering" or "stacking" syndications. What happens if the investor stops investing in real estate after say 20 years and having invested in 30 syndications over that period of time? Will taxes only be owed on the "remaining balance" from losses/gains carried forward or will recapture have to be caught up from all 30 investments? 

[Daniel Han]

The way I visualize is there is a running tab of passive income and passive loss. As long as you have enough passive loss to offset the income, there is no tax reliability.

For a simple case for ease of calculation - $100k every year and you get 50% of it as passive loss, no distribution along the way, 5-year hold and sell.

after 5 years, you accumulated $250k passive loss. Your year 1 syndication is sold and profit+recapture is $250k (it was a home run).

for that year, there is no tax.

However, for your year 2, 3, 4, and 5 investments, you won't have a passive loss to offset the gain. If you reinvest the proceed of the year 1 investment, then it could generate a passive loss for the year 2 investment. but you could eventually run out of passive loss to offset.