Schedule K-1
Many real estate and equity crowdfunding investments are indirect using LLCs or other SPVs, which will send you one of these each year at tax time.
When you invest in many types of real estate and equity crowdfunding offerings, what you’re actually receiving is not a direct ownership stake in the property or company, but rather a membership interest in a “special purpose vehicle” (SPV) set up for the investment, usually an LLC (though sometimes a Limited Partnership or other entity).
Schedule K-1 is the IRS form you’ll typically receive at tax time, which indicates any income (for example from interest payments or rental income) that you received from the SPV. The K-1 will also show what percentage ownership you have in the SPV.
In the case of some equity investments, you may receive a K-1, but it won’t report any income until/unless there’s some form of liquidity event like an acquisition. The IRS has more information on Schedule K-1, or you may wish to ask your tax professional for more details on the tax implications of investment crowdfunding on your particular situation.
Want to learn more but aren’t sure where to start? You can explore 168 crowdfunding investment platforms in our database and learn more about the nuts and bolts of crowdfunding and alternative investing on our blog. Did you know you can use a self-directed retirement account to invest in many alternative investments? Rocket Dollar makes it easy, and when you sign up using that link you'll be helping to support YieldTalk.
Featured Reviews
EquityMultiple
EquityMultiple stands out among real estate crowdfunding investment platforms because their main investors and senior leadership come from institutional real estate finance, rather than being VC-funded. Seed funding for the company was provided by Mission Capital (later acquired by Marcus & Millichap) and their co-founders and board of advisors come from the New York real estate finance and law community. They offer fewer investments than some other platforms, but that’s a deliberate choice to take a more curatorial approach to dealflow. Overall, EquityMultiple is a solid choice for accredited investors looking for a hands-off way to invest in commercial real estate.
"Gain exclusive access to high-yield commercial real estate deals"
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First National Realty Partners
First National Realty Partners (FNRP) is a commercial real estate private equity firm that focuses on grocery-anchored commercial shopping centers, offering both investments in individual properties and an Opportunity Fund across all of their offerings.
"First National Realty Partners (FNRP) is a rapidly growing commercial real estate private equity firm that owns and operates real estate throughout the United States. FNRP focuses on expanding its portfolio by acquiring market-dominant, well-located commercial assets well below replacement cost. "
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Percent
Percent aggregates private-credit investments from a range of originators offering small-business, crypto, venture loans, litigation finance and more, including international debt investments. Low minimums.
"Percent unlocks exclusive private credit investments for your portfolio. Access select alternative investments on the platform powering the future of private markets."
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