Most syndications are private offerings, and are structured as limited liability companies due to the flexibility allowed in the structure of the partnership and the protection it provides for stakeholders. General partners (GPs) are responsible for all operations associated with the property while limited partners (LPs) are not liable for the entity's debts/liabilities.

The LLC is a combination of the sponsors and investors. The property is owned by the LLC and passive investors are part owners of the LLC and consequently the property. Investors cannot be held personally responsible for the debt of the property.

Investors prefer an LLC structure given that any potential losses incurred are limited to the amount invested by the passive investor. Investors also receive a pass-through tax treatment which means that the LLC does not pay any income tax; instead members report their share of the LLC’s income on their own tax returns.

These are known as Schedule K-1 - which is a tax form issued annually for an investment in a partnership to report each participant’s share of the partnership’s earnings, losses, deductions and credits. Passive investors will use the K-1 to report the income from the syndication on their own tax returns.