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Old 05-14-2021, 03:23 PM
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Join Date: Nov 2011
Posts: 3
real estate passive investor and k1's


I invest passively in real estate multi-family buildings (200+ units) and also in an ATM fund (they put 10-12 ATM's in my names in various states and do all management). There is a principal/sponsor who manages everything and a few hundred limited partners like myself. I have a few k1's which have invested in many states 12 for me). For the real estate investments, it's the usual - incurring losses for 5 years, carrying them over and then reconciling when the property is sold to a REIT or global bank usually at the 5-7 year mark. I spoke to my local CPA and he said technically, I should file my passive carry-over losses in every state listed in the K1. However, it's going to be $70 for each state and adding that up for 12 states and over 5 years it's quite a bit of money.

He also said practically and based on his 15 year history as a CPA, he's not seen states come after the few hundred investors for a single property sale as it's not easy for them to enforce this. Is that accurate? If they come after you, he said most states will agree to take and reconcile the passive carry-over losses even though I didn't file them in prior years. Over 5 years, it's going to cost me roughly $4000 in additional tax filing fees so trying to figure out the cost/benefit here


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