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Actions that Can Void a 1031 Exchange
A 1031 exchange can be effective for deferring taxes on the sale of property used for business or investment purposes. However, the approach requires strict adherence to IRS regulations.
The 1031 Exchange: A Basic Guide for Investment Property Owners
As a real estate investor, you might have come across the 26 U.S. Code § 1031 – “Exchange of Real Property Held for Productive Use or Investment,” or the “1031 Exchange,” for short. If you haven’t heard of this, here’s your introduction.
What to Know about 1031 Exchange Restrictions
The 1031 exchange—also called the “like-kind” exchange—allows investors to “swap” a real estate property for another of equal or greater value. When performed correctly, the process can help investors defer capital gains and depreciation recapture taxes generated by the property’s sale.
How Does a 1031 Exchange Work With Rental Properties?
A 1031 exchange, based on Section 1031 of the Internal Revenue Code, allows property owners to defer capital gains taxes when they sell one investment property and purchase another similar property. This strategy is beneficial for rental property investors seeking to potentially expand their portfolio, increase cash flow, or diversify their investments. Here’s helpful information on how a 1031 exchange works with rental properties.
What Is the Fair Market Value (FMV) in a 1031 Exchange?
Fair Market Value (FMV) is the price a property would sell for in an open and competitive market under normal conditions. It represents the value agreed upon between a willing buyer and a willing seller, with neither party under pressure to complete the transaction.
Can REITs Invest in Limited Partnerships?
For investment property owners, exploring the relationship between Real Estate Investment Trusts (REITs) and Limited Partnerships (LPs) such as joint ventures can reveal new opportunities for portfolio diversification and passive income. REITs, known for their tax-advantaged structure and focus on income-producing real estate, often seek innovative ways to broaden their investments —including partnering with LPs. By examining this interplay with specific examples, investors can better understand the benefits and challenges of this approach.
Is a Delaware Statutory Trust (DST) a Disregarded Entity?
A disregarded entity is a legal structure for tax purposes under the Internal Revenue Code. It refers to a business entity that is legally separate from its owner(s) but treated as the same entity for federal income tax purposes. Common examples include single-member LLCs, which pass income or losses directly to the owner for tax reporting.
How to Invest in a Delaware Statutory Trust (DST) Through a Self-Directed IRA
Investing in real estate through a Delaware Statutory Trust (DST) offers significant advantages, especially for those seeking passive income and tax benefits. Combining this strategy with a Self-Directed Individual Retirement Account (IRA) allows investors to tap into real estate opportunities while maintaining the tax advantages of their retirement accounts. Here’s a step-by-step guide on how to achieve this, along with industry-specific terms and examples.
How to Conduct Due Diligence on a Delaware Statutory Trust (DST) Investment
Investing in a Delaware Statutory Trust (DST) offers certain advantages, especially for those seeking passive real estate opportunities or completing a 1031 exchange. However, as with any investment, conducting thorough due diligence is essential to assess its suitability, risks, and alignment with your financial goals. This guide outlines key steps for evaluating a DST investment, with a focus on industry-specific considerations.
What to Look for in a Delaware Statutory Trust (DST) Sponsor
Delaware Statutory Trusts (DSTs) offer an opportunity for passive real estate investment and 1031 exchange benefits. A significant factor in determining the success of your investment is the DST sponsoring or managing the DST, often called a “sponsor.” Choosing the right DST sponsor is a critical element to ensuring your investment aligns with your financial goals and risk tolerance. Here’s a guide to what you should consider when evaluating a DST company.
