*Update February 2019: Realized has established its Secondary Market and has completed its first Secondary Market transaction.
Fractional 1031 investments are subject to the same benefits and risks as other real estate investments. However, the structure of fractional 1031 investments have their own unique characteristics.
* Update September 2018: Realized has established its Secondary Market and has completed its first Secondary Market transaction.
Delaware Statutory Trusts, or DSTs, are an alternative for 1031 exchange investors seeking replacement properties, offering the potential for monthly income and diversification without any on-going landlord duties.1 Since 2004, when the IRS approved the Delaware Statutory Trust for 1031 exchange-qualified co-ownership, investors have purchased approximately $20 billion worth of real estate/replacement properties.2
About a year ago, we published an article titled “Disadvantages of Delaware Statutory Trust (DST) 1031 Exchange Replacement Properties” and it quickly became one of our most read articles. In fact, it remains our most popular article today. I worry that readers of that article might think “Why would I even keep reading about DSTs?”
What is the first thing that comes to mind with the words “off-campus student housing?”
Our previous blogs on 1031 Exchanges focus mostly on real property, or real estate. However, the Internal Revenue Code (IRC) 1031 also covers what is dubbed “personal property.” In other words, property held for investment and/or business purposes, but that isn’t real estate, is also eligible for 1031 exchanges - at least for the current time.
Last week, House Republicans released H.R. 1, their long-awaited 429-page tax reform proposal. The bill, which is titled the ‘Tax Cuts and Jobs Act (“TCJA”) leaves 1031 “like-kind” exchanges intact!
Not all exchanges are voluntary. If your insured home or investment real estate was destroyed by a fire, earthquake, hurricane or other natural disasters beyond your control, you likely will receive insurance proceeds in amounts that are greater than your adjusted tax basis. In this situation, a taxable capital gain exists – even if your property was decimated through an “act of God.”
August and September 2017 have been highlighted by a series of catastrophic storms. Hurricane Harvey roared ashore in South Texas, then parked on top of the Houston area, dumping more than 50 inches of rain in some areas. And, as of this writing, we are just beginning to assess the damage caused by Hurricane Irma.
Part 4 in the Realized Series "2017 Tax Reform Impact on Real Estate"
Much of the recent news coming from President Donald Trump’s administration has been focused on healthcare and the wall. Though Trump tax reform has been on the back burner, there are indications that Congress and the President will begin the process of tax overhaul in fall 2017. It’s uncertain how tax reform will impact the overall economy. However, based on the limited information we have, tax reform could have a profound change on how you invest, and what type of capital might make the most sense.
More than 10 years ago, the securitized 1031 Exchange market (real estate interests that are packaged and sold as securities and that qualify for 1031 exchange purposes) was dominated by tenant-in-common (TIC) Sponsors. TIC investments grew at a frantic pace from the start of the new millennium, increasing in volume from under $500 million of annual equity raised in 2002 to over $3.6 billion annually by 20061.
