Higher after-tax IRR
Sell at stabilization
About a 2½-year hold
22.6%
Target IRR, after tax
Both IRRs above are targets, not guarantees.
Total received, after tax$1,664,000
After-tax return calculator
Real estate development produces large paper losses in its early years. Depending on your situation, those losses can be worth a great deal — or nothing at all. Two questions tell you which.
For accredited investors. This page is not an offer to sell or a solicitation to buy any security. Figures are illustrative projections, not guarantees, and not tax advice.
Tier Four · 10% preferred
$100k$5M
Commitments of $1,000,000 or more earn a 10% preferred return. Smaller commitments earn 8–9%.
Do you have other passive income?
This is the single biggest factor. It decides whether the losses help you now or sit unused until the property sells.
per year
$0$3M
Income from other real estate, syndications, or businesses you do not actively run.
Projected return, before and after tax
Higher after-tax IRR
Refinance and hold
About a 7½-year hold
15.9%
Target IRR, after tax
Both IRRs above are targets, not guarantees.
Total received, after tax$2,087,000
The IRRs shown are targets projected from the Citana pro forma, not guarantees. They depend on assumptions that may not be realized, and your result will differ.
All four bars sit on one scale, so a bar in one case is directly comparable to the same bar in the other.
With no other passive income, the losses cannot be used until the property sells. They are not lost — they are released against the gain at exit, which is why the after-tax figures still hold up. But there is no benefit in the early years. Answer yes above to see the difference.
Compared with the alternatives
| Where the money could go | How it’s taxed | Kept after tax |
|---|---|---|
| This fund — refinance and hold | Deferred, then mostly capital gain | $2,087,000 |
| An income fund or private credit deal — 10.8% | Ordinary income, every year | $1,549,000 |
| Public equities, held throughout — 10% | Long-term gain, taxed once at sale | $1,757,000 |
| Investment-grade bonds — 5.5% | Ordinary income, every year | $1,254,000 |
Alternative returns shown are illustrative placeholders for comparing tax treatment, not forecasts of those investments. Same holding period, same tax profile assumptions.
Why there is a difference at all
A paper loss appears
When the buildings open, the tax code lets the partnership write off a large share of their cost right away — even though no cash left the building. It shows up as a loss on your K-1.
Sometimes you can use it
That loss is passive. It can offset other passive income — other real estate, other syndications, businesses you do not run day to day. It cannot offset salary, dividends, or stock gains.
It reverses at sale — at a lower rate
When the property sells, those write-offs are taxed back. But a large share comes back at capital-gain rates rather than ordinary rates, and any losses you never used are freed up against the gain.
Assumptions and disclosures
Assumptions
Top federal bracket (37%), the 3.8% net investment income tax, and a 3.5% blended state rate — 44.3% combined on ordinary income. Long-term capital gain at 23.8% plus state; building depreciation recaptured at a 25% federal cap plus state. Cost segregation is assumed to move 22% of depreciable basis into 5- and 15-year classes, with 100% bonus depreciation. Projected property cash flows are drawn from the Citana pro forma dated 8 April 2026, Class A position. Figures are internal rates of return on the projected cash flows, before and after the tax computed on those assumptions.
These are projections and not guarantees
These are projections and not guarantees. They depend on assumptions that may not be realized and on facts specific to each investor — your bracket, your state, your other income, and your holding period. Your result will differ, possibly materially.
Risk disclosure
Real estate development involves substantial risk, including construction delay and cost overrun, lease-up risk, interest-rate and refinancing risk, illiquidity, leverage, and loss of principal. Interests are not registered, are not freely transferable, and there is no public market for them. Past performance and projected performance do not predict future results.
Not financial, tax, or legal advice
Metropolitan Holdings is not a financial, tax, or legal advisor. Consult your own CPA and counsel before relying on anything here. This page is not an offer to sell or a solicitation of an offer to buy any security; any offering is made solely through the Private Placement Memorandum, which contains the governing risk factors and tax disclosure. Tax law changes; figures reflect law as of August 2026.