Fortitude's Insights

Condemned Property and a 1031 Exchange

Posted by Daniel Raupp on Jun 24, 2017 12:15:00 PM

If a property will be condemned in the future and the landlord will receive a condemnation award, should they do a 1031 exchange with the proceeds and buy a new property?

Keep in mind, the 1031 option may be restrictive. With the 1031 exchange, the landowner cannot take possession of the money; instead the money must go directly to a Qualified Intermediary (QI) to qualify for a 1031 exchange. If the condemnation award check is made out to the landowner, a 1031 exchange is no longer an option.

Additionally, once he gets the condemnation award, he has 45 days to identify a property. The landowner is locked into the subject property and then has 135 days to close. In other words, he has only 180 days to identify and close on a property.

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Topics: 1031 Exchange, 1033 Exchange, Delaware Statutory Trust

DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Diversification does not guarantee profits or guarantee protection against losses. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA). Fortitude Investment Group is independent of CIS, CAM and CIA.

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