Internal Revenue Code section 1031, which establishes the transaction structure referred to as a 1031 Exchange, is one of the most advantageous sections of the U.S. tax code. A 1031 exchange allows for the deferral of taxes when investment property is sold in conjunction with the purchase of another replacement property. The tax savings alone…
With 2021 behind us and eviction moratoriums coming to an end, investment property owners ready to make a change are evaluating new opportunities and often planning to perform a 1031 Exchange. Many owners are motivated to sell because of the increasingly demanding regulatory environment. Others are selling because of lifestyle changes, and the desire to…
If you own highly appreciated investment property and have considered performing a 1031 Exchange, then you have likely heard about Delaware Statutory Trust (DST) replacement property – you may even have friends that have invested in DSTs. DSTs have been around since 2004; however, they have become increasingly popular with landlords ready to retire from…
“Is that your final answer?” You may recognize the question made famous by the popular TV game show Who Wants to Be a Millionaire? Choosing the right answer in this game gives you a shot at winning big money, while the wrong answer leaves you with nothing. Investors conducting a 1031 Exchange face a similar…
If you’re looking for a clear and concise answer to this question, here it is: Yes, you can 1031exchange out of a DST. If you’re the type who wants to know a little more about the hows and whys of 1031 exchanges and DST, we are happy to elaborate. First things first, a DST is…
I have always wanted to come to the rescue like John Wayne did in almost all his movies. It didn’t matter if he was saving settlers from the bad guys in the Wild West, saving Shinbone from Liberty Valance, fighting at the Alamo, the Civil War or World War II; he always gave it his…
Over the course of the past several years, we have observed incremental growth in the number of investors choosing Delaware Statutory Trusts (DSTs) as a preferred means of passive real estate investing for like-kind, tax-deferred 1031 exchanges.
There are many clients who inquire about different 1031 exchange options. Some investors have inquired about the 721 UPREIT (Umbrella Partnership Real Estate Investment Trust) mechanism in both DSTs and Private and Publicly Registered Non-Traded REITS. The question that many investors ask is – Can I 1031 Exchange into a REIT? The 721 UPREIT can…
Below is a hypothetical example of a 1031 exchange investor that purchased DSTs with loans on them. It exemplifies the risk of debt, and the potential benefits of remaining as debt-free as possible when investing in DSTs.
IRC 1031 allows owners of investment property to defer capital gains taxes, on the sale of property, so long as another investment property is purchased per the rules of the IRC 1031. Tax deferred exchanges have long been utilized by apartment complex owners to defer taxes and build their investment portfolios. Many owners of multifamily…