Types of Investments
These are the four common investment structures we use to own investment real estate
1
Limited Liability Company
LLC
The property is usually held in a Limited Liability Company (“LLC”), General or Limited Partnership structure, usually domiciled in Delaware. These entities are reported as a partnership for tax purposes and the members of the LLC receive a K-1 partnership tax return for federal and state income taxes.
2
Delaware
Statutory Trust
DST
An investment structure used for a single asset or portfolio of assets. The DST qualifies for IRS 1031 exchange as like kind property. Investors report their investment on Schedule E as direct real estate investment in the federal tax returns
3
Tenant In
Common
TIC
Direct ownership with up to 35 direct owners used for a single asset or portfolio of assets. TIC usually qualifies for IRS 1031 exchange as like kind property. Investors report their investment on Schedule E as direct real estate investment in the federal tax returns.
4
Private Real Estate Investment Trust (REIT)
An investment structure that is a “pass through” entity, meaning it is a disregarded entity from tax and IRS perspective. Investors receive a 1099 for the dividends received each year.