- Tax reporting
- Early exits and transfers
- Quarterly reporting
- Updating information
In this article, we will cover some of the most common topics we hope you will consider before making an investment on the CrowdStreet Marketplace. Note: These considerations are not exhaustive, and you should carefully review each offering in detail and consult with your legal, tax, and financial advisors before making an investment on the Marketplace.
First, let’s talk about taxes - everyone’s favorite subject.
How can I prepare for tax season as an investor? Make sure that all of your information in your CrowdStreet profile is up-to-date, accurate, and matches the information found on your W-9. Sponsors may begin to prepare their tax documents as early as December, so it is important to keep your CrowdStreet profile updated at all times.
For tax reporting, most deals on the CrowdStreet Marketplace will generate a Schedule K-1, which is a standard IRS form that is issued annually. You will receive a single federal Schedule K-1 for each investment you’ve made through the Marketplace. You may also receive additional or alternative tax documents, such as K-2, K-3, or 1099, depending on your investment.
When will you get your K-1? CrowdStreet encourages and works with sponsors to upload their K-1 packages into your Investor Room generally by March 15th. However, sometimes the sponsor will file for an extension. We ask sponsors to communicate with you if they need an extension, as this will impact your decision to file an extension for your own individual tax returns.
While completing due diligence, you should ask sponsors when they anticipate tax reporting to be finalized. Post-investment, you can refer to the Targeted Tax Document Date in your Investor Room. We ask that sponsors keep this up-to-date.
Please keep in mind that tax aspects of such investments can be complex. Neither CrowdStreet or its affiliates offer tax advice. Investors are strongly encouraged to seek advice from qualified tax professionals.
Early exits and transfers
While there are many advantages to investing in commercial real estate, remember that it is highly illiquid. Unfortunately, there is almost no option to redeem your capital or exit the investment early before the hold period ends. Hold periods will vary by asset, but will often last multiple years, and several market factors can change the actual hold period. Hold periods are not guaranteed and are subject to change.
Can you transfer ownership of your investment? Due to the highly-regulated nature of private offerings, transferring ownership of your investment is not a simple request, and cannot be facilitated through CrowdStreet. You must work directly with the sponsor to transfer your investment, if it’s possible at all.
If a transfer request is granted by the sponsor, CrowdStreet can work with you to update your Portfolio page to reflect the transfer.
The timing and occurrence of distributions are determined by the sponsor. You should refer to the Operating Agreement in your deal documents to determine how and when a distribution might be issued. When a sponsor issues a distribution, they will use the distribution instructions provided within your Investing Account. The sponsor will then upload the distribution amounts into the CrowdStreet portal so that the information is reflected in each corresponding Investor Room, as well as post any statements, as applicable.
While CrowdStreet is here to help the sponsor with support or training, it is the sponsor who ensures this information is uploaded correctly and in a timely fashion for investors. If you have any concerns in regards to any distributions, reach out to the sponsor team via your Investor Room.
It is your responsibility to ensure your distribution banking information and preferred payment method are always up-to-date for the Investing Account that you used to make the investment. Some sponsors may request that you use a specific payment method (ACH, Wire, or Mail). This is allowed, and we recommend that you comply with the sponsor's request if you are able. If you are not able to comply, reach out to the sponsor to discuss other options.
Please keep in mind that distributions are not guaranteed.
The primary way that a sponsor will contact you is through the email that you used to make the investment, so make sure that you are checking that email for updates and messages. Sponsors will not have access to this email address, but they can send you emails through our investor management system.
You can also find all emails sent to you in your Message Center, so it is equally important to check your Message Center periodically.
Every sponsor is required to post quarterly reports for each deal closed on the Marketplace, and this quarterly report will appear in your Investor Room under the Documents section. Sponsors are generally asked to provide this report within 45-60 days after the quarter ends, so please wait until that date has passed before inquiring about when the report will be posted.
What is included in a quarterly report? Each sponsor has their own method and style when creating quarterly reports. We have asked that sponsors include financial statements, a qualitative narrative, and deal specific data points. For CrowdStreet Advisor-managed funds, a consolidated report of Fund activity will be issued quarterly.
Overall, make sure that you are updating your information in your CrowdStreet profile and Investing Accounts whenever it changes. This includes, but is not limited to, changes to your:
- Banking information.
- Email address.
- Phone number.
- Mailing address.
- Distribution payment method preference.
- Whether or not your entity is disregarded.
Sponsors will use your current CrowdStreet profile and Investing Account information when preparing distributions and tax documents. Therefore, it is important to keep your information up-to-date if you want to avoid delays or errors.
This has been an overview of some considerations you should make as an investor before investing through CrowdStreet. If you have any additional questions, don’t hesitate to explore our Help Center, Resource Center, or reach out to our Investor Relations team at email@example.com.