Tax-Efficient Investment Strategies

Private real estate and alternative investment strategies are speculative, illiquid and involve a high degree of risk, including possible loss of principal. There can be no assurance that any investment objective, distribution target, capital preservation goal or tax result will be achieved. This summary is not complete and should be read together with the applicable offering documents, subscription materials and governing agreements.

• Interests are generally not registered under the Securities Act of 1933 or listed on any exchange; no public market is expected to develop.
• Investors may have limited liquidity and significant restrictions on transfer, redemption or resale.
• Performance may be affected by real estate market conditions, interest rates, financing availability, leverage, tenant or borrower credit, operating costs, property values and sponsor execution.
• Fees, expenses, selling commissions, broker-dealer compensation and sponsor affiliates may create conflicts of interest and reduce investor returns.
• Past performance, targets, projections and examples are not guarantees of future results.

• A DST may be structured to qualify as replacement property for Section 1031 purposes, but tax treatment depends on transaction structure and each investor’s facts.
• Investors must satisfy strict exchange requirements, including identification and exchange deadlines, use of a qualified intermediary and avoidance of actual or constructive receipt of proceeds.
• Debt replacement, cash boot, property qualification and timing issues may cause partial or full gain recognition, including depreciation recapture.
• DST investors generally have no direct management control and limited ability to influence financing, leasing, refinancing, sale timing or property-level decisions.
• A future step-up in basis depends on current estate tax rules and each client’s estate plan; tax law may change.

• QOZ benefits require eligible gain, timely investment, proper election and ongoing compliance by the investor, QOF, QROF and/or QOZ business.
• Pre-2027 and post-2026 QOZ rules differ; rural QROF benefits, zone designations and effective dates should be reviewed with tax counsel.
• Tax benefits may be reduced or lost if holding-period requirements are not satisfied or if the fund fails to maintain QOF/QROF or QOZ property requirements.

• Development and redevelopment strategies involve entitlement, zoning, permitting, construction, environmental, leasing, valuation, financing, operating and exit risks.
• Tax-free appreciation and depreciation recapture treatment require satisfaction of statutory and regulatory requirements and may depend on the sale structure.
• Investors may owe tax on deferred gain before receiving liquidity from the investment.
• Tax reporting obligations may include Form 8949, Form 8997 and other filings; penalties or inclusion events can arise if requirements are not met.

• Roth conversions generally create taxable income in the conversion year and may affect marginal tax rates, estimated taxes, state taxes, Medicare premiums, credits and deductions.
• Tax offsets from real estate depreciation, deductions or losses are not guaranteed and may be limited by passive activity, at-risk, basis, UBTI/UBIT, plan, custodian or other rules.
• Private real estate investments held by IRAs require an appropriate custodian and careful compliance with prohibited transaction, valuation, liquidity and reporting requirements.
• Roth conversion planning should be coordinated with RMD timing, estate planning, beneficiary designations and the client’s liquidity needed to pay taxes from outside assets.

This material is for discussion purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. Any offering may be made only through definitive offering documents provided to eligible investors. Peachtree Group and its affiliates do not provide tax or legal advice. Investors should consult their own tax, legal and financial advisors before investing.