Think REITs are your only option for tax-advantaged real estate investing? Think again. REIT shareholders generally do not receive direct allocations of a REIT's property-level depreciation. REIT distributions can consist of ordinary taxable income, capital gain distributions, and return of capital, and qualified REIT dividends may receive treatment under §199A, subject to the statute's limitations. For 2025, Nareit's June 2026 snapshot reports that, on a market-cap-weighted basis, listed REIT dividends were 79% ordinary taxable income, 10% return of capital, and 11% long-term capital gains.
Partnership-style real estate ownership can offer a more direct allocation of property-level tax items, depending on the investment structure. For investors seeking to reduce taxable rental income, fractional real estate investing platforms and syndications are often organized as LLCs taxed as partnerships, which generally report an investor's distributive share of tax items on Schedule K-1.
This guide examines six investment options and how depreciation may, or may not, reach the investor. We start with mogul, a fractional real estate platform club founded by former Goldman Sachs executives, offering property-specific fractional ownership of professionally vetted and managed properties.
Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.
Key Takeaways
Tax reporting depends on the ownership vehicle, not the marketing label: Individually owned rental real estate is generally reported on Schedule E and Form 4562, while investors in partnerships or LLCs taxed as partnerships generally receive a Schedule K-1. Debt notes, REITs, DSTs, and other structures can use different tax reporting and should not be assumed to pass property-level depreciation through a K-1
REITs and partnership-style ownership are not tax-equivalent: REIT shareholders generally do not receive direct allocations of property-level depreciation, though REIT distributions are not simply ordinary income either, as shown in Nareit's current industry snapshot
Entry points and eligibility vary widely across structures: several of the options in this guide are open only to accredited investors and call for substantially larger commitments, while mogul is built for broader access, with an average investment of about $10k and a typical portfolio allocation of $17,321 per property
Cost segregation studies can accelerate first-year deductions: Engineering studies reclassify building components into shorter recovery periods, which can qualify components for accelerated or bonus depreciation under IRS Publication 946
100% bonus depreciation is now permanent, not a benefit that expires after 2026: P.L. 119-21 made the 100% additional first-year depreciation deduction permanent for qualifying property acquired after January 19, 2025, subject to §168(k) eligibility requirements, as confirmed by IRS Notice 2026-11 and Treasury and IRS guidance
"LLC" is a legal form, not a federal tax classification: An LLC can be taxed as a partnership, a corporation, or a disregarded entity. Partnerships and LLCs taxed as partnerships generally issue Schedule K-1s, and depreciation may affect net rental real estate income or loss rather than appearing as a simple standalone proportional-depreciation figure
Depreciation does not automatically offset salary or other ordinary income: Rental real estate losses generally enter the passive activity regime under Form 8582, subject to exceptions including the active-participation allowance and the real estate professional rules
1. mogul
mogul offers fractional ownership in income-producing residential real estate. Investors hold proportional membership interests in a property-specific LLC taxed as a partnership, rather than individually deeded title to a fraction of the home. Founded by former Goldman Sachs executives with more than $10 billion in deal experience, mogul brings institutional-quality residential real estate to new and veteran investors.
How mogul's Tax Benefits Work
Each property on mogul is held in a separate state-registered LLC. When you invest, you receive a membership interest in that LLC, making you a proportional owner of the entity that owns the underlying property. This structure is designed to provide:
Potential pass-through depreciation via partnership taxation. mogul's property-specific LLC structure is designed to provide K-1 reporting and may allocate depreciation and other property-level tax items proportionally to investors, depending on the particular offering and each investor's tax circumstances. Reviewing how depreciation works makes that allocation easier to evaluate
Monthly income once a property is operational. An investor's proportionate share of net rental income is generally credited monthly once a property is operational, based on actual distributable rental income after applicable expenses, fees, and reserves, so amounts vary with property performance
Yearly tax benefits, including depreciation allocations proportional to ownership percentage, subject to each investor's own tax circumstances. mogul brings the same tax benefits of real estate that traditional ownership offers into a digital-first model
Property-specific tax reporting, with applicable K-1s and other tax documents made available to investors in-app and tied to each individual property in your portfolio
Platform Highlights
Assets on Platform: $90M+ in assets invested through the platform
Properties: 65+ properties managed by mogul
Target Returns: 15% to 20% target annual IRR
Average Returns: 18.8% average annual return, compared with the S\&P 500's 9%
Investors: 40,000+ investors on the platform, and 90% of mogul investors invest a second time, typically at 3x their first investment
Average Investment: about $10k, with a typical portfolio allocation of $17,321 per property
Property Types: mid-term rentals and short-term rentals as the primary operating models across single family rentals, with offerings that have also included long-term rentals and sale-leasebacks
Unique Advantages
mogul's team personally invests in every property offered on the platform, aligning management interests with investor returns. mogul also reports that fewer than 1% of properties reviewed pass its diligence process, backed by institutional-grade underwriting. New members receive first $10k protection: if the investments made in their first seven days show a loss of up to $10,000 over the first year, mogul covers that amount with its own balance sheet capital.
Best For: Investors seeking property-specific fractional real estate ownership with potential K-1 depreciation allocations, professionally vetted and managed properties, and a founding team drawn from Goldman Sachs real estate.
2. First National Realty Partners (FNRP)
First National Realty Partners focuses on grocery-anchored commercial retail properties for accredited investors, offering access to necessity-based retail centers.
Tax Depreciation Benefits
Commercial property depreciation: Nonresidential real property is generally 39-year property under MACRS
Cost segregation opportunities on retail improvements and tenant buildouts, which can identify shorter-lived components eligible for accelerated or bonus depreciation under Publication 946. FNRP has published its own investor guidance on cost segregation and bonus depreciation and on the current bonus depreciation regime
Pass-through K-1 tax treatment where the offering is structured as a partnership or an LLC taxed as a partnership, per the Form 1065 instructions
Bonus depreciation potential limited to qualifying property with a recovery period of 20 years or less, plus specified statutory categories. The underlying building itself generally remains on its 27.5-year or 39-year recovery period, and land is not depreciable
Platform Highlights
Portfolio: FNRP currently reports 65+ properties across 26 states totaling more than 12 million square feet
Asset Focus: Necessity-based retail (grocery-anchored centers)
Recent Activity: FNRP acquired Marc's Grocery Center in March 2026, along with other grocery-anchored shopping centers
Best For: Accredited investors seeking necessity-based, grocery-anchored retail exposure with depreciation potential from larger-scale commercial assets. FNRP's own 2026 market commentary describes the retail sector as resilient.
3. DLP Housing Fund
DLP Housing Fund is an evergreen private real estate fund focusing on multifamily communities and build-to-rent housing. The fund emphasizes below-replacement-cost value-add existing housing with an impact investing mission centered on preserving affordable housing.
Tax Depreciation Benefits
DLP Housing Fund uses a different tax structure from a direct partnership-style real estate investment. DLP describes its potential depreciation-related tax advantages as indirect because the fund uses a REIT subsidiary, so depreciation benefits reach investors indirectly rather than through direct proportional allocations.
Residential property depreciation on the 27.5-year MACRS schedule at the property level
Cost segregation studies on multifamily assets, which may identify qualifying shorter-lived components of acquisitions or renovations eligible for accelerated or bonus depreciation under Publication 946. A renovation does not become bonus-depreciable merely because it is value-add work
Monthly income distributions combined with annual liquidity options
Platform Highlights
Target Annual Return: 10-12% (Net)
Annual Preferred Return: 6%, paid monthly
Liquidity: Annual redemption period
Best For: Investors seeking diversified multifamily exposure with an impact investing mission, where any depreciation benefit is indirect rather than a direct partnership allocation.
4. EquityMultiple
EquityMultiple provides a commercial real estate investment platform built around three investment pillars: Keep (cash management), Earn (senior debt and preferred equity), and Grow (equity positions).
Tax Depreciation Benefits
Depreciation benefits are most relevant to qualifying equity structures. Tax reporting and depreciation allocation vary by offering, and debt and note products are treated differently from ownership interests that allocate real estate depreciation.
Reporting varies by structure: EquityMultiple's January 27, 2026 tax guidance states that its LLC-SPV investments issue K-1s, while some non-LLC investments such as dependent-note structures issue Form 1099-INT
A K-1 reports a partner's distributive share of tax items generally, per the Form 1065 instructions, so how depreciation is treated follows from the underlying structure
Cost segregation opportunities on qualifying equity deals
Varied asset types across multifamily, office, retail, and industrial, each with its own applicable recovery period
Platform Highlights
Representative current offering figures: EquityMultiple's investment page labels the $5,000 minimum and 7.4% figure as a representative nine-month Alpine Note, the $20,000 Earn minimum as a representative Ascent investment, and the $15,000 Grow minimum as a representative mixed-use investment. Minimums and return targets vary by offering
Transaction Volume: EquityMultiple currently reports more than $3 billion in commercial real estate transactions
Investment Pillars: Keep, Earn, and Grow
Asset Classes: Mixed-use, multifamily, office, retail, industrial
Best For: Investors seeking exposure to several real estate capital structures, where depreciation eligibility varies from one offering to the next.
5. Origin Exchange
Origin Exchange specializes in Delaware Statutory Trust (DST) investments designed for 1031 exchanges.
Tax Depreciation Benefits
Tax reporting is not a K-1 during the DST phase: Origin states that its DST investors receive a substitute 1099. A K-1 applies only if the interests are later exchanged into operating-partnership units
§1031 deferral is not absolute: A properly structured like-kind exchange can defer some or all federal gain on qualifying investment real estate, subject to the exchange's facts, boot, depreciation recapture rules, and applicable state law. The IRS states that gain must be recognized to the extent the taxpayer receives money or other non-like-kind property, and depreciation recapture rules can require current ordinary-income treatment. See also Form 8824 instructions and Publication 225
Basis mechanics, not a fresh 27.5-year schedule: For property acquired in a like-kind exchange, the 2025 Form 4562 instructions state that carryover basis is generally depreciated over the remaining recovery period using the same method and convention as the exchanged property, while excess basis is generally treated separately as newly placed-in-service property
§721 UPREIT pathway is potential, not assured: Origin offers a potential §721 pathway that could continue tax deferral if the IncomePlus Fund exercises its acquisition option and the transaction otherwise qualifies. Origin expressly states that exercise of that option is not guaranteed
Platform Highlights
Minimum Investment: $250,000 per DST
1031 Exchange Volume: Origin reports more than $250 million in total DST deal value in the Origin Exchange program as of May 31, 2026, and its June 9, 2026 announcement stated that approximately $140 million had been raised across three completed DSTs and the then-current Orlando offering
Current DST: Orlando Nona DST, approximately $46M equity offering
Fee Structure: Origin reports no acquisition fee, brokerage sales commission, or disposition fee; its current fee schedule lists a 1.00% one-time organizational-and-offering fee and a 1.25% annual asset-management fee
Best For: Investors with significant capital gains from property sales seeking tax deferral through 1031 exchanges, with a potential UPREIT conversion that is contingent rather than assured.
6. Syndicated Equities
Syndicated Equities offers direct and joint venture real estate investments across 10 listed property categories: retail, office, industrial, medical, multifamily, student housing, hospitality, parking structures, self-storage, and co-living.
Tax Depreciation Benefits
Tax reporting varies by structure: The company's current FAQ states that its DST investments receive a Grantor Statement, while partnership or LLC investments receive Schedule K-1
Cost segregation: Syndicated Equities says it typically performs cost-segregation studies on investments
Ground-up development does not produce 100% first-year deductions on total cost: Under the current §168(k) regime, bonus depreciation generally covers qualifying MACRS property with a recovery period of 20 years or less, plus specified statutory categories. A residential rental building is generally 27.5-year property and nonresidential real property generally 39-year property, and land is not depreciable. Cost segregation can identify shorter-lived components that potentially qualify
Multiple property categories carry different applicable recovery periods, so depreciation schedules vary by investment
Annual tax statements are prepared by third-party tax professionals and reviewed by Syndicated Equities' asset-management team
Online portal with tax, distribution, and operating information for all investments
Platform Highlights
Asset Classes: 10 listed property categories
Investment Focus: Value-add and ground-up development opportunities
Securities: Offered through FINRA member Metropolitan Capital Investment Banc
Best For: Investors seeking exposure to multiple commercial real estate property types, including development opportunities where cost segregation may identify qualifying shorter-lived components.
Why mogul Stands Out for Tax Depreciation Benefits
Accessible Entry Point
mogul opens property-specific fractional real estate ownership, with potential K-1 depreciation allocations, to a broad range of investors, with an average investment of about $10k and a typical portfolio allocation of $17,321 per property. Most of the other options above are open only to accredited investors, with commitments that run substantially higher. That accessibility allows investors to build diversified property portfolios across multiple properties and reduce concentration risk.
Property-Specific LLC Ownership Structure
Unlike REITs, DSTs, or debt-focused note products, mogul places each property in a separate state-registered LLC taxed as a partnership. Investors hold proportional membership interests in the LLC that owns the individual home, not individually deeded title to a fraction of that home. That structure is designed to provide K-1 reporting and potential proportional allocations of property-level tax items.
Potential Depreciation Tax Shield on Distributions
mogul's property-specific LLC structure may allocate depreciation that reduces taxable income associated with rental distributions. The depreciation tax shield is what separates single family rental ownership from REIT exposure: a 10% yield held through a REIT can translate to roughly 5% to 7% post taxes, while a 10% yield on a single family rental can remain 10% post taxes and still register as a loss for tax reporting. Actual after-tax outcomes vary by investor, offering, tax bracket, tax strategy, and other circumstances, so no fixed before-tax to after-tax conversion applies across investors.
Goldman Sachs Pedigree with Personal Investment
mogul was founded by former Goldman Sachs executives reporting more than $10 billion in collective deal experience, applying institutional-grade underwriting to every property. Before mogul, co-founder Joey Gumataotao grew Goldman Sachs' single family rental platform from $0 to $1 billion in under 12 months. mogul reports that fewer than 1% of properties reviewed pass its diligence process and that its team personally invests in every property, aligning interests with investors.
Multiple Rental Strategies
mogul invests across single family rental verticals, with mid-term rentals and short-term rentals as its primary operating models, and offerings that have also included long-term rentals and sale-leasebacks. That range allows investors to select individual properties and rental approaches rather than buying into a blind pooled fund. Tax treatment varies by offering and by investor circumstances.
Loss Protection for New Members
New members receive first $10k protection. If the investments made during a new member's first seven days show a loss of up to $10,000 over the first year, mogul covers that amount with its own balance sheet capital, as outlined in how it works.
For investors seeking to build generational wealth through real estate while considering tax efficiency, mogul combines accessibility, institutional-quality selection, and a partnership-style ownership structure designed for K-1 reporting. Explore available properties to review current opportunities and detailed underwriting, including annual revenue, market comparisons, and scenario analysis.
Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.
Frequently Asked Questions
What is the difference between direct property ownership and investing in a REIT for tax depreciation?
Tax reporting depends on the ownership vehicle. Individually owned rental real estate is generally reported on Schedule E with depreciation on Form 4562, while investors in partnerships or LLCs taxed as partnerships generally receive a Schedule K-1 reporting their distributive share of relevant tax items. Depreciation typically affects net rental real estate income or loss rather than appearing as a simple standalone figure. REIT shareholders, by contrast, generally do not receive direct allocations of a REIT's property-level depreciation. REIT distributions are not simply ordinary income either: they can consist of ordinary taxable income, capital gain distributions, and return of capital, and qualified REIT dividends may receive treatment under §199A. Nareit's June 2026 snapshot shows the 2025 market-cap-weighted breakdown at 79% ordinary taxable income, 10% return of capital, and 11% long-term capital gains.
Can non-accredited investors benefit from real estate depreciation through fractional platforms?
Yes. mogul's current 2026 material describes access without an accreditation requirement, and accredited investors can also participate. Most other platforms discussed here are limited to accredited investors with substantially higher commitments, which is worth weighing when choosing an investment platform. Whether depreciation reaches any individual investor still depends on the specific offering, the entity's tax classification, and the investor's own circumstances.
How does a cost segregation study enhance depreciation benefits for real estate investments?
A cost segregation study is an engineering analysis that reclassifies building components into shorter depreciation categories. Instead of depreciating the entire building over 27.5 or 39 years, components such as flooring, fixtures, and certain systems may be assigned to 5-year, 7-year, or 15-year recovery periods. Under the current §168(k) regime, bonus depreciation generally applies to qualifying MACRS property with a recovery period of 20 years or less, plus specified statutory categories, so a study can accelerate first-year deductions on qualifying components. The underlying building generally remains subject to its applicable 27.5-year or 39-year recovery period, and land is not depreciable.
Are there income limitations on how much depreciation I can deduct from my rental properties?
Yes. Depreciation can reduce taxable rental income and may generate a tax loss, but whether that loss can offset non-passive income depends on passive activity rules and other applicable limitations, including basis and at-risk rules. Rental real estate losses are generally passive under the Form 8582 rules, but exceptions apply. The 2025 Form 8582 instructions retain a special rental real estate allowance for qualifying taxpayers who actively participate, generally up to $25,000, with a phaseout based on modified AGI. The real estate professional rules can also change the result. Publication 925 covers the details, and a qualified tax professional can address your specific situation.
What role does material participation play in deducting real estate losses, including depreciation?
Material participation can be established under any of the seven IRS tests; more than 500 hours in the activity is only the first test. Others include participating in substantially all of the activity, participating more than 100 hours where no other individual participated more, prior-year participation tests, and a facts-and-circumstances test. Material participation alone does not automatically make rental real estate losses non-passive. For an activity classified as a rental activity, IRS guidance indicates it generally remains passive even if the taxpayer materially participates, unless an applicable exception applies, such as qualifying as a real estate professional and materially participating in the rental real estate activity. Short-duration rentals are a separate analysis. An activity is not treated as a "rental activity" for §469 purposes when, among other exceptions, the average period of customer use is seven days or less, or 30 days or less with significant personal services. In those circumstances, material participation can determine whether the activity is passive. Fractional platforms handle property management on behalf of investors, so rental activities held through these structures are generally treated as passive under the §469 rules.