Business Glossary

limited partnership that invests in real estate. The partnership buys properties such as apartment or office buildings, shopping centers, industrial warehouses, and hotels and passes rental income through to limited partners. If the properties appreciate in value over time, they can be sold and the profit passed through to limited partners. A general partner manages the partnership, deciding which properties to buy and sell and handling administrative duties, such as distributions to limited partners. In the early 1980s, many real estate partnerships were structured to reduce limited partners' tax liability, because operating losses, plus accelerated depreciation from real estate, could be used to offset other taxable income. But these deals were largely discontinued after the tax reform act of 1986 introduced the principle of passive losses, meaning that investors could no longer use real estate partnership losses to offset their income from salaries and other investments. Since the mid-1980s, partnerships have been designed to produce high current income and long-term capital gains through appreciation in the underlying real estate, not tax benefits.

limited partnership that invests in real estate. The partnership buys properties such as apartment or office buildings, shopping centers, industrial warehouses, and hotels and passes rental income through to the limited partners . If the properties appreciate in value over time, they can be sold and the profit passed through to the limited partners. A general partner manages the partnership, deciding which properties to buy and sell and handling administrative duties, such as distributions to limited partners.