How Does a 1031 Exchange Work With Rental Properties?

houses with people discussing.

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.

Jan 31, 2025

What Is the Fair Market Value (FMV) in a 1031 Exchange?

Houses.

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.

Jan 30, 2025

Can REITs Invest in Limited Partnerships?

Sky view of buildings.

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.

Jan 29, 2025

Is a Delaware Statutory Trust (DST) a Disregarded Entity?

block letters spelling out tax.

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

Person calculating.

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

house with coins and a graph.

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

House, coins, and calculator.

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.

Can You 1031 Exchange Out Of A Delaware Statutory Trust (DST)?

Coins with percent signs and house

A 1031 exchange is a powerful tax-deferral strategy for property investors, allowing them to reinvest proceeds from a property sale into “like-kind” properties to defer capital gains taxes. Delaware Statutory Trusts (DSTs) are increasingly popular for fractional ownership of high-value real estate. But what happens when you’re ready to exit a DST? Can you still use a 1031 exchange?

What Are the Seven Deadly Sins of a Delaware Statutory Trust (DST)?

Coins stacked up with house on top

A Delaware Statutory Trust (DST) is a versatile tool for real estate investment property owners to facilitate 1031 exchanges, spread their risk, and potentially receive passive income from real estate investments. However, like any other form of investment, DSTs have pitfalls that must be understood and managed to achieve the desired results.

The Role of Limited Partners in UPREITs: What Investment Property Owners Should Know

People discussing buildings.

If you are an investment property owner, you know that managing and expanding your portfolio comes with challenges. Whether you're aiming to defer taxes, increase liquidity, or diversify, Umbrella Partnership Real Estate Investment Trusts (UPREITs) can be a valuable investment vehicle. However, understanding the role of Limited Partners (LPs) within UPREITs is essential for making informed decisions.

Jan 15, 2025

Download The Guide To 1031 Exchange

The 1031 Investor's Guidebook
Download eBook