When is an UPREIT Taxable?
Digging into what triggers taxes on an UPREIT (Umbrella Partnership Real Estate Investment Trust) is best approached with a foundation of understanding of the UPREIT and the REIT itself.
1031 Improvement Exchange Rules: What You Need to Consider
A 1031 improvement exchange is like a traditional 1031 exchange with improvements added to the exchange. With a traditional 1031 exchange, investors will find a property of at least equal value to exchange. These properties are often turn-key and don’t require big improvements.
What is a Tenants In Common (TIC) Syndication?
Investors who want to 1031 exchange into a syndication will immediately encounter a few roadblocks. Doing a 1031 exchange into a syndication is not possible since the syndication (in most cases) is considered a security. The exchanger is trying to 1031 exchange from real property into a passive investment. Passive investments are securities. Trying to exchange from real property to a security does not meet the “like-kind” 1031 exchange requirement.
Can You Lose Money Investing in a DST?
DST (Delaware Statutory Trust) investments are attractive to many people interested in real estate. The reasons for DST's popularity are numerous and include these:
What Happens at the End of a Delaware Statutory Trust (DST)?
Delaware Statutory Trusts (DSTs) are often attractive to investors who want access to significant commercial real estate (CRE) assets similar to those institutional investors own. A DST is created by a sponsor, who identifies and acquires the targeted assets. The sponsor then markets the offering to investors and contracts with a master tenant to manage the property.
How Much Can You Inherit Without Paying Taxes?
Every so often, Congress introduces bills to reduce or repeal what are known as “death taxes.” Eliminating these levies tends to create controversy; one side argues that the estates of high net-worth descendants should pay their fair share in taxes. The other side argues that such a tax is unfair to those left behind.
How UPREITs Can Potentially Benefit Property Owners
Real estate investors are always searching for ways to save on taxes. One of the biggest tax events a real estate investor will face is when their property is sold for a profit. To mitigate tax consequences from the sale of property, investors will often use a 1031 exchange. However, a 1031 exchange isn’t the only tool available for tax mitigation. Its cousin, the 721 exchange, provides a few alternative benefits to investors.
How is Debt Treated in an UPREIT?
As a brief background: In a traditional REIT structure, the trust owns property directly or through limited partnerships. However, suppose an investor contributes real property to a REIT. In that case, the investor must recognize any increase in the value (fair market value over tax basis) that has occurred and would owe taxes on that amount.
Examining Sponsor Payments and Yield Manipulation Tactics
Delaware Statutory Trusts (DSTs) can offer many advantages to investors. One possible benefit of DSTs is they provide the opportunity to invest in quality real estate in smaller increments due to the fractional ownership structure.
Are You Having These Three Conversations About Real Estate With Your Advisory Clients?
Financial advisors rarely discuss the potential benefits of investing in real estate with their clients. The reason is twofold: outside of investing in publicly traded real estate investment trusts, real estate isn’t usually taught as part of the finance curriculum for registered investment advisors or certified financial planners; and financial professionals don’t have a compensation structure in place for clients who want to move money into commercial or residential real estate.
