1031 Investment Distributions and Timeline

Written By Jamie Holeva
 

Overview: While the projects are in pre-development, they typically do not generate taxable income. Investors have two options for receiving their returns.

 
 

Scenario 1: Current Distributions

You Receive:

  • Distributions during the investment period

  • These are considered Return of Capital

  • Not taxable when received

Tax Impact:

  • Reduces your tax basis (your investment value)

  • At exit (property sale), total interest received is treated as taxable gain

  • Gain can be deferred again by reinvesting in a new 1031 exchange

Scenario 2: Deferred Distributions

You Wait:

  • No distributions during the investment period

  • You receive a lump sum at the end: your original investment plus total deferred interest

Tax Impact:

  • Deferred interest is taxable again

  • Like scenario 1, it can be deferred if reinvested in a new 1031 exchange

Timeline

 

Exit Options:

  • CRP Affordable will seek new investments as each investment cycle is completed

  • Investors will also have the option not to participate in subsequent investment opportunities

Jamie Holeva
Previous

Estate Planning Benefits of a 1031 Exchange