Taxes on The mezzanine

Using mezzanine financing 
for investment in real estate may raise the suspicions of tax authorities. Nevertheless, such a form of finance has more advantages than disadvantages. But one has to know how to explain these advantages to the officials properly Obtaining suitable funding for a project is vital both for its launch and for its ultimate financial success. Ideal financing should be cheap, flexible and – best of all – possess tax advantages. But because it is usually difficult to attain anything ideal, the accepted form of funding by investors is bank loans (secured by a mortgage or a pledge on shares), which cover most of the cost of the investment. Any shortfalls in finance are made up for by investors out of their own funds. Apart from applying this classic ‘duet’, in their efforts to attain an ideal form of funding more and more investors are using another form, referred to by the collective term ‘mezzanine financing’, because it is