K-1s and Taxes for Passive Real Estate Investors
What a Schedule K-1 reports, when it arrives, why extensions are common, and questions to bring to your CPA.
Read →For Self-directed IRA & Solo 401(k) investors
Investing through a self-directed IRA or Solo 401(k): the rules that matter
Retirement accounts can hold private real estate, with extra rules on custodians, prohibited transactions and leverage.
Why it comes up
Why sdira & solo 401(k) look at private real estate
- Using retirement capital for private real estate.
- Tax-deferred or tax-free growth (Roth) of distributions.
- Diversifying retirement assets beyond public markets.
What to watch
Considerations specific to you
- Leverage in a deal can create UBTI (unrelated business taxable income) inside an IRA; Solo 401(k) rules differ for real estate debt.
- Prohibited transaction rules: no personal benefit or dealings with disqualified persons.
- Custodian timelines can slow funding; start paperwork early.
Accreditation
How accreditation usually applies
Most private real estate offerings are limited to accredited investors. Sponsors using Rule 506(c) must verify your status.
- Net worth test: $1 million+, alone or with a spouse or spousal equivalent, excluding your primary residence.
- Income test: $200,000+ individually or $300,000+ jointly in each of the last two years, with the same expected this year.
Summary of SEC rules for education. Confirm your status with your advisor; sponsors may request documentation. See who qualifies.
Start here
Recommended guides
Real Estate Syndication 101: A Guide for Accredited Investors
GPs and LPs, the capital stack, hold periods, returns and the questions that matter, explained plainly.
Read →
How to Read a PPM and Operating Agreement (Without a Law Degree)
Where to focus in the private placement memorandum, subscription agreement and operating agreement, and what to ask your attorney.
Read →Free tools
Use these next
Other guides by situation
PhysiciansBusiness ownersTech professionalsExecutivesPre-retireesDual-income householdsExperienced LPsFormer landlordsAttorneys & CPAsLiquidity eventsHigh-W-2 professionalsFirst-time investorsFamily officesRIAs & advisors
Educational content only; not investment, tax or legal advice, or an offer to buy or sell any security.