Dictionary of Real Estate Terms: conduit tax treatment
conduit tax treatment
income passing through an entity without taxation. Certain entities are preferred as real estate ownership vehicles because they pass income and losses through to underlying owners without paying a tax or changing the nature of their earnings.
Example: A partnership normally receives conduit tax treatment. Whatever it earns, whether in the form of ordinary income or loss, capital gain or loss, is passed to each partner in that form of income.
