alternatives to buying a replacement property

We have access to 1031 Exchange friendly investments that seek to provide clients the opportunity to defer their real estate gains tax implication without having to buy a new investment property.

Investments offered by national real estate sponsors may qualify as replacement properties for a tax deferred 1031 Exchange. With these types of investments, an investor will own an undivided share of an institutional grade income properties.

Along with deferral of taxes on the relinquished property, the investor receives potential benefits of monthly cash flow from any active property leasing operations and appreciation of real estate valuation while not having the headaches of daily property management. And no tax is due until the replacement property is eventually sold, which is usually in the 5–10-year time horizon.

At that time the real estate investment can be again exchanged for another real estate investment or property to continue deferring taxes. If the investor dies while owning the property, the heirs may receive a stepped-up basis, and the previously deferred taxes may never come due.

The list of potential benefits and drawbacks of a DST is not all encompassing. There are material risks associated with investing in real estate securities including illiquidity, general market conditions, interest rate risks, financing risks, potentially adverse tax consequences, general economic risks, development risks, and potential loss of the entire investment principal.

Institutional-grade properties generally refer to a property of sufficient size and stature to merit attention from large national or international investors, and typically have the characteristic of high-quality assets in major markets and at price points beyond the reach of individual investors and smaller partnerships.

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