How To Evaluate an UPREIT Sponsor Effectively
Investing in an umbrella partnership real estate investment trust (UPREIT) may be considered by some investors due to potential tax-deferral features and access to diversified real estate exposure. Like any type of investment, however, UPREITs will require thorough research to determine whether a particular offering aligns with your objectives. One aspect of due diligence is evaluating the UPREIT sponsor. The sponsor typically serves as the architect, manager, and long-term operator of the UPREIT, with responsibilities that can influence how the UPREIT is managed over time.
Can DSTs Replace Traditional Real Estate Ownership?
As you become a more experienced investor, you may encounter more advanced strategies and vehicles such as the Delaware Statutory Trust (DST). This vehicle may offer features that differ from those found in portfolios composed solely of directly owned real estate. This leads to the question: Can DSTs replace traditional real estate ownership? The answer is more complex than a simple yes or no. Below, Realized 1031 has shared an insightful article discussing the nuances. Keep reading to learn more.
DST UPREITs: A Tax-Deferred Path Toward Potential Liquidity
Liquidity and tax efficiency are among the most common concerns among clients with investment real estate. For advisors working with property-heavy portfolios, a challenge is helping clients transition out of illiquid holdings in a way that may help reduce immediate tax consequences. One approach available in certain cases is the DST-to-UPREIT strategy, which may offer a tax-deferred method of accessing REIT-backed equity exposure.
Using UPREITs vs. Direct 1031 Exchanges: Pros and Cons
Various tax-deferred investment strategies are available to real estate investors, and two common options are direct 1031 exchanges and UPREITs. These both allow you to defer capital gains taxes under specific circumstances, but each carries distinct features, potential benefits, and limitations. Choosing the most appropriate strategy depends on your investment goals, risk tolerance, and other long-term financial objectives.
Can Qualified Intermediaries Provide Interest on Exchange Funds?
Most investors who are conducting a 1031 exchange focus on following IRS rules to ensure eligibility for tax deferral. Compliance with these rules is essential for deferring capital gains taxes and managing the timing of tax obligations. However, one often-overlooked detail is the treatment of interest earned on escrowed proceeds. Can your capital actually generate interest while in escrow? Can qualified intermediaries provide interest on exchange funds? The answer is a qualified yes. Below, Realized 1031 has shared an insightful article that dissects the intricacies.
Can UPREIT Structures Help in Reducing Estate Taxes?
Estate planning is a complex process with various goals, one of which is to help reduce estate taxes and ease the burden on heirs. There are a few strategies you can employ to support these goals, such as investing in an umbrella partnership real estate investment trust (UPREIT).
How Passive Real Estate Strategies May Support Estate Planning Goals
Estate planning has long focused on preserving wealth, minimizing tax burdens, and facilitating the transfer of assets to beneficiaries.. While trusts, wills, and insurance remain foundational tools, advisors increasingly recognize the potential role of passive real estate in supporting these objectives.
Can Qualified Intermediaries Be Replaced During an Exchange?
A 1031 exchange is a detailed real estate transaction that, when executed properly, may allow for the deferral of capital gains taxes. The complexity of the process stems from the many rules the IRS has implemented to prevent abuse. One of these requirements is working with a qualified intermediary sometimes referred to as an accommodator.
1031 Exchange Solutions for High-Net-Worth Investors
As a high-net-worth investor (HNWI), managing your real estate portfolio goes beyond acquiring new assets. You also have to consider other aspects like tax exposure, wealth preservation, and long-term flexibility. One strategy designed to help address these considerations is the 1031 exchange. Also called the like-kind exchange, this strategy can potentially allow you to defer capital gains taxes, diversify your portfolio, and even enjoy passive income.
How DSTs Can Complement a Traditional Real Estate Portfolio
Real estate remains a widely used investment option due to its perceived relative stability and the range of market sectors available. However, many investors maintain portfolios made up primarily of traditional, directly owned real estate. This concentration can introduce increased risk exposure and often requires ongoing, active management. For those seeking broader diversification or reduced management demands, alternative structures may be worth considering.
