Tax season is underway in our household, the unfortunate side effect of having two CPAs under one roof 😊 At One Street Capital, we work with our partners to identify the best possible tax strategies for investors.  One Street is starting to communicate limited partnership information to our teams to prepare tax returns for its investments and K-1s for investors.

What to Expect: Equity Investors

As an equity investor, you will receive a K-1 from your operator. The Schedule K-1 is typically between one and four pages long and reports your share of income, losses and dividends.  As a rule of thumb, you should receive one K-1 per investment.

In your first year of investing, you’ll see losses from depreciation. One of the most significant benefits of investing in real estate, depreciation allows you to write off the cost of the physical devaluation of a property — all while your asset is likely gaining value in the market.

This is the last year for the 100% bonus depreciation tax benefit introduced under the Tax Cuts and Jobs Act (TCJA) of 2017. Starting in 2023, this amount will drop to 80%.

While there is no set due date, One Street releases K-1s via the investor portal no later than March 31.

Now is a great time to reach out to your operator and ask when you will see your K-1 for 2022. The anticipated delivery date may inform whether or not you file for an extension.

As an experienced limited partner, I choose to extend my tax return each year. Filing for an extension is typically a no- or low-cost option that removes the stress of gathering multiple K-1s before the April deadline. This, in turn, can reduce costly errors or omissions. As a wise accountant once told me, “It’s better to extend than amend!”


Tax Season Checklist for Passive Investors

Have you invested in a syndication, private debt or a fund this year? Here are some steps you can take to get organized ahead of your filing deadline.

Let your CPA know that you invested as a limited partner in real estate.

  • Ensure that your operator has your correct TIN, address and entity name. If you are a One Street Capital investor, you can verify this information in your profile on the investor portal.
  • If you are investing with a self-directed retirement account, ensure you correctly identified the TIN and titling.
  • If you plan to retitle your investment, get started now.
  • Get your paperwork in order if you plan to make a Roth conversion.
  • As soon as your K-1 is delivered, check for accuracy and notify your operator immediately if something is incorrect.

Important Dates for 2023

  • March 15, 2023: Filing deadline for passthrough entities (partnerships, multi-member LLCs and S-corporations). A six-month federal extension to September 15, 2023, is available (state extensions will vary.)
  • April 18, 2023: Filing deadline for C-corporations and individuals. A six-month federal extension to October 16, 2023, is available (state extensions will vary.)

Preparing For a Smooth Tax Season

Whether you’re a new or seasoned investor, tax season can be stressful to navigate. It pays off to begin laying the groundwork early. One Street prides itself on offering a white-glove experience to help investors navigate every aspect of their passive investing journey.   If you have any questions, please do not hesitate to contact us.