“1031” refers to IRS Tax Code Section 1031 which provides an exception and allows you to postpone paying tax on the gain of a sale so long as you reinvest the proceeds in similar property as part of a “like-kind” exchange within 180 days of the sale of the original property. A 1031 exchange can only be used for real property, not personal or intangible property. The property being exchanged cannot be held primarily for sale. If the exchange includes property or money that is not like-kind, a gain must be recognized to the extent of the non-like-kind property or money received.
It's important to work with a real estate professional who is skilled in 1031 exchanges to ensure that the exchange is done correctly.
By using a 1031 exchange, you can defer capital gains taxes, allowing you to reinvest the full amount of your proceeds into a new property.
Deferring taxes means you have more capital to invest in a new property, potentially allowing for a better investment or a larger property.
A 1031 exchange can enable you to diversify your real estate portfolio by exchanging one property for multiple properties or vice versa.
Property exchanged through a 1031 can also benefit heirs, as the property can receive a stepped-up basis upon inheritance, potentially minimizing taxes for them.
By exchanging into a property that generates more income, you can improve your cash flow situation without incurring immediate tax liabilities.
A 1031 exchange provides the opportunity to change your investment strategy or geographic focus without the immediate tax burden.
A Deferred Sales Trust is a type of IRC Section 453 installment sale also know as a “seller carry-back.” By utilizing the IRS tax code, the seller of a highly appreciated asset realizes tax deferral benefits by not receiving actual or constructive receipt of the proceeds at the time of the sale, instead receiving payments made to them over time.
By transferring your funds into a DST, you can defer your capital gains tax and put that money to work for you. This strategy allows you to postpone capital gains tax payments indefinitely, potentially benefiting future generations. It's a proven method to protect your wealth and strategically plan for the future.
10-year increments extended in perpetuity
A Delaware Statutory Trust (DST) is a legal entity that allows investors to purchase fractional ownership shares in real estate properties. DSTs are similar to Real Estate Investment Trusts (REITs), but each trust is formed to acquire a specific parcel of real estate. When evaluating DST offerings, investors should: Vet the properties, Vet the sponsors, Understand the fees structure, Understand the debt terms, and Work with financial and legal advisors.
When evaluating DST offerings, investors should: Vet the properties, Vet the sponsors, Understand the fee structure, Understand the debt terms, and Work with financial and legal advisors.
Investors can defer capital gains taxes through participation in a 1031 exchange.
DSTs can provide stable passive income.
DSTs can help diversify an investor's portfolio.
DSTs can offer asset and liability protection.
DSTs can provide access to larger properties that might be too expensive to purchase in full.
DSTs can offer low minimum investment amounts