If you’re invested in a Jacob Grant Capital syndication, you’ve received your Schedule K-1 for the 2025 tax year through your investor portal. This is the time of year where many investors find themselves asking the same question: what am I actually supposed to look at?

The first thing to note is that a Schedule K-1 form is a tax document, not a performance report. It reflects your share of partnership activity for the year, which is separate from the property reports or investment updates that you receive throughout the year.

These private real estate investments are typically structured as partnerships, where the partnership itself generally does not pay taxes. Instead, taxable results pass through to investors individually and are reported annually on a Schedule K-1.

Because of that, the most useful approach is to focus on a few sections that explain what changed throughout the year.

Start with Box 19 (Distributions)

Many investors begin here because it shows how much cash was distributed during the year. It’s also one of the most commonly misunderstood sections of the form.

Box 19 reflects the cash the partnership distributed to you during the year. It does not represent profit, taxable income, or investment performance. Instead, it reflects your share of cash distributed after operating needs, lender requirements, reserves, and capital decisions at the property level.

Because of this, Box 19 often doesn’t match the income reported elsewhere on the K-1.

For example:

• it’s possible to receive distributions while reporting a taxable loss
• it’s possible to report taxable income while distributions are paused
• and it’s common for distributions to change as properties move through different phases of the hold period

Next: Look at Box 2 (Rental Real Estate Income or Loss)

For most passive real estate investors, this is one of the most relevant lines on the form.

This section reflects your share of the partnership’s taxable activity after adjustments such as depreciation. Because depreciation reduces taxable income without reducing actual cash flow, it’s very common for this number to show a loss even in years when a property generated income.

In some investments, accelerated depreciation strategies such as cost segregation studies can increase early-year depreciation allocations. This is one reason taxable income may look different from cash flow during the earlier years of an investment.

Depending on your individual tax situation, losses reported on a K-1 may be treated as passive losses and may offset passive income rather than ordinary income. Your tax advisor can help determine how this applies in your case.

You may also see results in Box 1 (Ordinary Business Income or Loss)

Depending on how an investment is structured, taxable activity may appear here as well.

Like Box 2, this number reflects partnership-level results after adjustments such as depreciation and financing costs. It’s another example of why the K-1 should be read as a tax snapshot rather than a measure of investment performance.

The capital account: what changed in your position this year

Toward the lower portion of the K-1, you’ll see something called your capital account.

Think of this as a running record of your position in the partnership over time. It generally reflects:

Your original investment

plus allocated income

minus allocated losses

minus distributions received

Many investors find this section helpful when comparing one year’s K-1 to the next because it shows how your share of the partnership has changed over time.

One important detail to keep in mind is that the tax-basis capital account shown on the K-1 is not the same as your remaining invested capital used for distribution calculations within the partnership. The capital account reflects tax reporting adjustments over time, which can differ from how investment economics are tracked inside the offering.

Parts II-J and II-K: why some percentages change from year to year

Because your investment is structured as a partnership, your K-1 also includes a section showing your share of partnership profit, loss, capital, and liabilities.

These percentages reflect how taxable activity and financing are allocated across the partnership. They can change over time as capital is added, ownership structures adjust, or financing changes during the life of an investment.

For example, it’s possible for profit and loss allocation percentages to shift slightly even while an investor’s underlying capital ownership remains the same. This typically reflects normal partnership allocation mechanics rather than a change to the amount invested.

You may also see an amount listed as your share of partnership liabilities. This represents your allocated portion of the investment’s financing for tax purposes. It does not mean you are personally responsible for the debt. Instead, it affects how tax basis is calculated and how gains or losses may be reported over time.

Most investors don’t need to calculate anything from this section directly, but it helps explain why K-1 results naturally evolve from year to year.

Where depreciation recapture appears

Another question that comes up occasionally is: Where does depreciation recapture show up? This usually becomes relevant in the year a property is sold.

Instead of appearing as a single labeled line on the main K-1 page, depreciation recapture is typically included as part of the gain reported in the year of sale and described in the supplemental statements that accompany the form. Those supporting pages often explain the biggest changes investors see from one year to the next.

Why K-1s arrive later than many other tax forms

Investors sometimes notice that K-1s arrive later than documents like Form 1099s.

Because K-1s reflect partnership-level results that depend on property financials, lender reporting, and third-party accounting, they are typically finalized after those inputs are complete. That process allows partnerships to report results accurately across all investors.

One helpful reminder as you review your K-1

A Schedule K-1 answers this question: What was my share of taxable activity this year? It does not answer: How did my investment perform?

Because partnership accounting includes adjustments like depreciation, capital allocations, and financing effects that don’t directly reflect property-level cash flow, the K-1 is not a replacement for investor updates.

As always, we recommend reviewing your Schedule K-1 with your tax advisor to understand how it applies to your individual situation. Jacob Grant Capital does not provide tax advice, and the information above is intended for general educational purposes only and should not be relied upon as tax guidance.

Send us an email with questions and to connect - invest@jacobgrant.com.