Decoding Financial Statements When Exchanging DSTs into REIT Shares via Section 721
There are many ways to be involved with real estate ownership. There is direct ownership, which involves hands-on management and decision-making. Then there is passive ownership, including Delaware Statutory Trusts (DSTs) or real estate investment trusts (REITs).
The Downsides of a 1031 Exchange
A 1031 exchange can be a helpful way for you to defer recognition of capital gains on the sale of investment or business real estate while allowing you to enhance your portfolio. By exchanging your investment or business use property for like-kind real estate of equal or greater value, you could postpone tax obligations, leaving you with potentially more money for other investments.
UPREITs and Legal Aspects
When executed properly, Umbrella Partnership Real Estate Investment Trusts (UPREITs) can provide a tax-advantaged diversification approach or exit strategy if you’re done with active property ownership. However, the process can be intricate and involves legal and tax issues.
Converting a Primary Residence into a Rental Property
Selling your residential property might be a way to generate income. But it’s not the only way. You might also consider converting that primary residence into a rental property.
Refinancing a Tenancy-in-Common (TIC) Property
Refinancing can be a necessary strategy for investment property owners entering into a Tenancy-in-Common (TIC) agreement. However, due to the setup of a TIC, refinancing can be highly complex and require multiple steps. Understanding what’s involved in the process can help determine if refinancing the property is feasible.
Using Expenses to Reduce Capital Gains Taxes
Capital gains taxes (CGT) can represent a significant expense when you sell a property. However, there are ways to reduce the tax liability, including using certain expenses to offset realized gains.
Renting A 1031 Exchange Property to Friends or Family
The Internal Revenue Code Section 1021–”Exchange of Real Property Held for Productive Use or Investment–can be a way for you to possibly defer capital gains taxes and depreciation recapture on investment property you sell or use for business purposes.
Using Section 721 to Dispose of Commercial Real Estate
Owning and managing commercial real estate (CRE) properties requires a great deal of time, money, and know-how. If you’re a CRE owner or investor who wants to move on, you could sell your properties. However, property value appreciation can mean capital gains taxes.
The Factors Impacting NNN Property Returns
A triple-net lease (NNN) real estate property can provide steady passive income with minimal landlord responsibilities. However, a triple-net arrangement doesn’t guarantee automatic returns. Many factors are involved in the success of a NNN arrangement.
The Limitations of REIT Investments
A real estate investment trust (REIT) is a company that buys, sells, operates, and finances income-producing properties. REITs raise capital to acquire and manage these properties by selling units or shares to investors. Income generated by the owned properties through rent and property appreciation is distributed to investors as dividends or cash flow.
