How to Limit Distributions from Real Estate LLC

[Fkln Spees]

I am planning on investing into a real estate development LLC as a non managing member for the prospective development of a 90+ unit senior housing project. The returns and distributions are excellent (2.0 multiple) but will be delayed until year 4.

Ideally, if I had enough capital in my self-directed Roth IRA I could just purchase the unit with those funds and have the distribution return to my Roth avoiding taxes altogether. Unfortunately, I had to pull the money together out of pocket and am trying to explore the best tax mitigation stragtegies. I have been told that because the ownership entity is an LLC of which I purchased one unit as a non-managing member, that I will not be able to 1031 exchange into another real estate investment property. I have heard about the 1035 but most people say that is used exclusively for annuities.

Could anyone offer any other solutions as it relates to how I receive my distributions year 4? I want to stay in real estate and would like to defer the taxes by rolling it if possible. I would primarily like to avoid taking all of the capital gain in year 4 as ordinary income and lose close to 50% to our favorite uncle.

Thanks for your consideration in advance BP!