In a time when property sales are beginning to heat up again in hot markets across the United States, many sellers are stuck with selling their properties only to make lateral moves for the sake of completing their 1031 exchange. What many sellers, along with their professional real estate attorneys, CPAs and Qualified Intermediaries, are not familiar with is the 1031 securitized real estate exchange utilizing the Delaware Statutory Trust (DST) that is available to accredited investors only.
Simply put, in the real estate industry, a 1031 real estate exchange is a switch of one real estate asset for another investment property that is not personal (such as a primary residence).
If you have a profit on an investment property that you are relinquishing, you will most likely be subject to capital gains tax. Depending on what state you live in, this tax can be north of 30%. Under current policy there is no limit to the amount of 1031 exchanges you can facilitate. In other words, “Swap till you Drop”.
Fortitude Investment Group believes this is one of the greatest estate planning tools afforded to real estate investors due to the stepped-up cost basis on inherited assets.
After speaking with real estate attorneys, CPAs, and investment property real estate brokers on a daily basis, we have come to realize that the majority of these professionals are unaware of the 1031 Exchange utilizing the Delaware Statutory Trust (DST) as a potential option for their accredited investor clientele who are in need of replacement properties.
There are many investment property real estate owners that have held onto properties for decades and have realized large capital appreciation on their property assets. Unfortunately, many of the investors are at a point in their lives where they would like to sell their properties but are hesitant to do so because of the large capital gains tax they could be facing. Many of these investors are tired of what we call the three ‘T’s—toilets, tenants and trash!
Topics: 1031 Exchange
This article was written by: Matthew E. Rappaport, Esq., LL.M, Tax Planning and Structuring Attorney
In the wake of the Internal Revenue Service releasing Proposed Regulations pertaining to IRC 2704 yesterday, I have received many questions and conducted many discussions about the Proposed Regulations' content and potential impact. I posted a short status update about my preliminary thoughts yesterday and would like to expand on those thoughts with this article.
Investors desiring the tax deferral benefits of 1031 exchanges coupled with the advantages of fractional ownership are increasingly seeking the popular alternatives of Tenant-In-Common (“TIC”) or Delaware Statutory Trust (“DST”) co-ownership. Recently, DSTs have been gaining in popularity for a number of reasons including the ability to secure financing more easily and attract more investors with lower minimum investment threshold amounts.
Let’s look at some of the attributes of DST fractional ownership and how DSTs differ from TIC ownership.
PORT JEFFERSON, N.Y., June 1, 2016 /PRNewswire/ -- Fortitude Investment Group, LLC, is proud to announce the launch of their new website www.1031DST.com that is focused on educating and partnering with accredited real estate investors, qualified intermediaries, real estate attorneys, and CPAs. These partnerships will help facilitate 1031 exchange transactions utilizing a Delaware Statutory Trust (DST) to defer taxes on the sale of investment real estate while becoming a passive investor.
Many investment property real estate buyers and sellers, whether they are some of the most prominent real estate investors in the country right down to mom and pop who took a chance on buying a multi-family investment property in NYC years ago, may now be faced with a big challenge on what to do now that they are getting dream offers of a lifetime on their properties.