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These platforms can be provided by financial institutions, such as banks and brokerages.

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These platforms can be provided by financial institutions, such as banks and brokerages, or by technology companies and fintech firms.

Book a Strategy Call
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3 Tax Benefits of a Customizable Fund

There’s no getting around the fact that taxes make all our lives more difficult. But if you’re raising capital for a deal, you can reduce the impact that taxes have on your time and your profits by choosing the right fundraising model.

In this article, we’ll explore three compelling tax benefits offered by Avestor’s customizable fund model. From streamlining tax preparation to partnering with top tax firms and unlocking tax advantages for investors, the customizable fund presents an innovative approach that maximizes returns and minimizes tax burdens.

1. A Single K-1 for All Deals

When doing deal-by-deal capital raising — like with a traditional real estate syndication — capital raisers are required to file a separate K-1 for each deal an investor participates in. This creates a significant expense and waste of time for the capital raiser, and it’s a hassle for investors as well.

With an Avestor customizable fund, fund managers can issue a single K-1 that covers all the deals an investor participated in. 

This simplifies the tax preparation process for both you and your investors, and it reduces costs in the process. The more deals someone invests in, the higher your savings will be. 

2. Partnership with Top Tax Firms

Because the customizable fund model was something completely new, we knew we needed to put in extra time and effort to get the tax implications right. 

Avestor currently partners with some of the top 20 tax firms in the U.S.. With their help, we’ve automated and built our own proprietary tax modules which simplify the tax filing process for customizable fund managers. 

We’re also able to negotiate significant discounts for our clients who work with our tax preparation partners. 

Want to learn more about how we stay compliant? Check out this blog post for answers to our most frequently asked legal questions. 

3. Tax Benefits for Investors

Fund managers aren’t the only ones who can access tax benefits with a customizable fund. Avestor’s model also has significant advantages for investors — which in turn, will make people more willing to invest with you and allow you to grow your business faster. 

Because a customizable fund supports direct, deal-by-deal investments, investors can access certain tax benefits — like depreciation for real estate investments — that aren’t available to them if they invest through a blind pool fund or a REIT. Depending on the investor’s unique tax situation, capital gains and losses may also offset each other. 

Plus, receiving a single K-1 reduces tax preparation costs for the investor as well as for the fund manager. It’s a win-win situation and just one more benefit you can use to attract new investors to your customizable fund! 

Partner with Avestor to Simplify Your Taxes

If you’re ready to access these tax benefits and streamline your capital raising process, our team at Avestor would love to work with you. Keep in mind that Avestor is the first and only platform to offer a truly customizable fund model. Book a demo call with us today to start learning more. 

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