One of the reasons some investors hesitate before making their first passive real estate investment is uncertainty about what to expect at tax time.
They have heard about K-1s, depreciation, and paper losses, but the reporting can feel unfamiliar at first.
The good news is that a K-1 is usually much simpler than it seems once you understand what it is showing.
What Is a K-1?
When you invest in a private real estate fund, you usually come in as a limited partner in the fund. Instead of receiving a 1099, you receive an IRS Schedule K-1. This form is generated from the partnership’s annual tax return (Form 1065) and reports your specific share of the partnership’s income, deductions, and credits for the year.
Your CPA or tax professional will use the information on your Schedule K-1 to prepare your personal tax return. You don’t need to file the K-1 separately. Instead, the form reports your share of the multifamily property’s income, depreciation-related deductions, losses, and other tax items, which are incorporated into your individual tax return.
What You May See on a Schedule K-1
Every K-1 can look a little different, but a few sections usually matter most to investors:
- Ordinary income or loss from the property
- Rental income or loss from operations
- Depreciation-related losses that can reduce taxable income
- Capital gains if a property was sold during the year
For many investors, the most surprising part is that a property can generate cash distributions while still showing a taxable loss on paper because of depreciation.
Why That Matters
Real estate allows investors to depreciate the value of the property over time. Those depreciation deductions often flow through the K-1 and can help offset passive income from other real estate investments.
That means your K-1 can also give you a clearer picture of how your investment is performing behind the scenes.
What to Expect from BAM Capital
K-1s are typically issued after year-end once the partnership’s reporting is complete. At BAM Capital, our team works to provide investor reporting as clearly as possible so you understand what you are receiving and when to expect it.
For many investors, the first K-1 feels unfamiliar. After that, it often becomes one of the most useful documents they receive all year.
If you’d like to better understand how tax reporting works within a private real estate fund, reach out to the BAM Capital investor relations team at invest@bamcapital.com to discuss your questions and learn how it may apply to your investment strategy.
Disclaimer: This content is for informational purposes only and is not financial, tax, legal, or investment advice, nor an offer or solicitation to buy or sell securities. Investment opportunities offered by BAM Capital and its affiliates are made pursuant to Rule 506(c) of Regulation D, available exclusively to accredited investors, as defined by the Securities and Exchange Commission (SEC) and, if applicable, qualified purchasers, as defined by Section 2(a)(51) of the Investment Company Act of 1940. Verification of accredited investor status is required before participation in any investment.
Contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Financial terms, projections, or forward-looking statements contained herein are hypothetical and should not be interpreted as guarantees of future performance or safety. Such statements reflect BAM Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Investing in private real estate securities involves significant risks, including, without limitation, illiquidity, economic downturns, and potential loss of invested funds or capital. Past performance does not predict or guarantee future results. Historical transaction figures represent past performance across multiple deals as of the date this information was published, not a single investment transaction. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Prospective investors are strongly encouraged to conduct independent due diligence and consult with legal, tax, and financial advisors before making any investment decisions.
© 2026 BAM Capital. All rights reserved.
