Inside basis is the partnership’s basis in the assets. Tax Basis: There are two types of basis associated with a partnership – inside basis and outside basis. Origin investors can view the actual value of their investment by logging in to their Origin account and looking at the net asset value.

Valuation: As elaborate as a K-1 is, it does not report the fair value of the investment and it simply reports the tax basis of the investment. Private real estate investors should keep the following in mind when filing their taxes: Important K-1 and Tax Filing Information for Private Real Estate Investors For example, if a business earns a taxable income of $100,000 with two equal partners who share in the income pro-rata, each partner can expect to receive a K-1 with $50,000 of income on it. The individual investor then reports this information on his or her tax returns. It serves a similar purpose for tax reporting to the Form 1099, which reports interest and dividends from stock investments. The K-1 tax form reports each individual investor’s share of the partnership’s earnings, losses, deductions and credits from the business and any contributions or distributions made during the year. This is good for tax purposes because the tax deferral, tax shields, and the favorable capital gains rate paid at sale are big advantages of investing in private real estate.

tax code allows the use of certain pass-through taxation for such investments, which means that 100% of income and expenses flow through the partnership to the owners or partners. The Schedule K-1 (Form 1065) is an Internal Revenue Service (IRS) tax form issued annually for businesses that operate as a partnership, such as an investment in private real estate with Origin.

K1 form example