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Listen "14. What Happens When a Partner Sells Their Interest? Tax Implications Explained"
Episode Synopsis
In this episode of the Major League Real Estate Podcast, Nathan Sosa and Matt Hamilton break down the complexities of Section 754 elections and why they matter for real estate partnerships.
Nathan and Matt walk through:
- What happens when a partner sells or redeems their partnership interest
- How tax basis works in partnerships compared to direct property ownership
- Why disparities arise between fair market value and partnership book value
- The role of Section 754 elections in resolving those disparities
- Key differences between Section 734 and 743 elections
- The pros, cons, and long-term operational impacts of electing 754
They also explore practical considerations like appraisal costs, capital account adjustments, and the “flavor of income” effect that can make elections highly valuable in some cases but burdensome in others. Nathan and Matt close with insights on how syndicators and investors should evaluate these elections with their CPA to balance investor fairness, compliance, and long-term strategy.
Request a free discovery meeting: go.therealestatecpa.com/mlre
Subscribe to the REI Daily Newsletter: go.therealestatecpa.com/mlresubscriber
Get the Ultimate Guide for Real Estate Syndications: go.therealestatecpa.com/mlreultimateguide
Submit your questions to: [email protected]
The Major League Real Estate podcast is for general information purposes only and is not intended to provide, and should not be relied on for, tax, legal, investing, financial, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Only your individual attorney and tax advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained or mentioned within the podcast show and show notes do not create a relationship between the reader, user, or listener and podcast hosts, contributors, or guests. Any mention of third-party vendors, products, or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging with any vendor.
Nathan and Matt walk through:
- What happens when a partner sells or redeems their partnership interest
- How tax basis works in partnerships compared to direct property ownership
- Why disparities arise between fair market value and partnership book value
- The role of Section 754 elections in resolving those disparities
- Key differences between Section 734 and 743 elections
- The pros, cons, and long-term operational impacts of electing 754
They also explore practical considerations like appraisal costs, capital account adjustments, and the “flavor of income” effect that can make elections highly valuable in some cases but burdensome in others. Nathan and Matt close with insights on how syndicators and investors should evaluate these elections with their CPA to balance investor fairness, compliance, and long-term strategy.
Request a free discovery meeting: go.therealestatecpa.com/mlre
Subscribe to the REI Daily Newsletter: go.therealestatecpa.com/mlresubscriber
Get the Ultimate Guide for Real Estate Syndications: go.therealestatecpa.com/mlreultimateguide
Submit your questions to: [email protected]
The Major League Real Estate podcast is for general information purposes only and is not intended to provide, and should not be relied on for, tax, legal, investing, financial, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Only your individual attorney and tax advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained or mentioned within the podcast show and show notes do not create a relationship between the reader, user, or listener and podcast hosts, contributors, or guests. Any mention of third-party vendors, products, or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging with any vendor.
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