1031 Exchange Properties
Help Navigating 1031 Exchange Property Transactions
When you’re ready to change up your real estate holdings, it’s natural to look for solutions that allow you to limit or eliminate your tax obligations. Most property owners will turn to a 1031 exchange, which allows you to reinvest proceeds from your existing business or investment properties for other properties while deferring capital gains taxes. This can be a new or daunting thought for many. This is why we’ve assembled a team of industry veterans to help our clients navigate the process. Our clients appreciate the approachable way we walk them through each step.
Most people aren’t even aware of some of the most beneficial 1031 exchange replacement property options: including Delaware Statutory Trusts, Tenants in Common, and Triple Net Lease Properties. Some of these options are similar in nature and offer many of the same benefits as Real Estate Investment Trusts - which, unfortunately, do not qualify for 1031 exchanges.
At 1031 Exchange Place, we work closely with you to ensure that you understand the steps, benefits, and qualifications for each of these investment options. Our holistic approach removes biases and allows us to put our client's needs first when we discuss the pros and cons of each option. Our decades of experience help us oversee the details to be sure that every transaction is compliant with federal, local, and IRS rules and regulations.
Delaware Statutory Trust (DST)
DSTs have become incredibly popular 1031 investment options for those that need or want steady monthly income but without the landlord headaches. Investing in DST properties can include a variety of option types: health care, retail, multifamily, industrial, hospitality, and senior living properties among many others. If you’re interested in this type of investment opportunity, reach out to talk with one of our seasoned advisors who can help you better understand if a DST may be a good fit for you.
Tenants in Common (TIC)
Tenants in common arrangements allow two or more parties to share ownership of a piece of land or property. The individual owners may have equal shares or own percentages of the commercial or residential property. If one tenant in common dies, ownership of the property can be passed down to a beneficiary of that tenant’s choice.
Other joint ownership arrangements include "tenants by entirety" and "joint tenancy with rights of survivorship", but in these types of co-ownership, the ownership shares must be allocated equally. TIC ownership provides more versatility for joint owners. If you and a partner are looking for a TIC opportunity, ask us how we can help you become owners of a 1031 exchange property.
Triple Net Lease (NNN)
This common lease option is popular among commercial real estate owners. A triple net lease agreement assigns all of the property operating expenses to the tenant, including maintenance, insurance, and taxes, in addition to rent. As an investor or landlord, this is a low-risk option that provides passive income without the hassle of dealing with most of the trouble that often occurs on or to rental properties.
While the benefits to the tenant may not appear obvious at first glance, there is at least one major attraction. NNN properties generally have lower rent rates for longer periods. With a high-quality tenant in place, you can enjoy a mainly passive investment.
Real Estate Investment Trust (REIT)
In a real estate investment trust, a company owns and operates an income-producing property. This 1031 exchange property value opportunity makes real estate investment possible for individuals with ordinary means. Real estate investments are generally limited to investors with deep pockets, but a REIT allows several individuals to invest in large-scale investment real estate.
Examples of this type of real estate include apartment buildings, hotels, office complexes, self-storage facilities, and warehouses. Individual investors gain a share of the income with limited exposure to the costs and risks associated with owning commercial real estate.
Each of these 1031 exchange properties offers advantages to investors and property owners. Each option allows you to defer your tax liability when you decide to make changes to your investment portfolio.
It’s important that you comply with the many IRS rules, including the rule that defines whether properties are like-kind to each other. There are also time constraints to bear in mind. These and other details complicate 1031 exchange property transactions, but with 1031 Exchange Place financial advisors at your side, you can consider the benefits of each option and move forward with confidence that every “I” has been dotted and every “T” has been crossed appropriately.
Whether you want to sell an office complex or purchase a senior care facility with several partners, 1031 Exchange Place helps you with sales and acquisitions. We handle educational, commercial, industrial, retail, and other types of properties.
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