Six Passive Strategies for Replacing Your Rental Burden
There are far more owners who want to sell their rental properties than are currently listing them for sale. Why do they—or perhaps you—continue to hold properties they no longer want to operate? Common reasons include:
- Unsure or afraid of tax consequences
- Unwilling or unable to qualify for a new loan
- Discomfort in owning outside a local market
- Procrastination/dread of another transaction
- Fear of inability to find a similar or better property
As it turns out, for many people there are strategies that may address these concerns. Under §1031 of the Internal Revenue Code, you can defer—and potentially avoid altogether—your taxes when you sell your current rental, and invest in one of these passive replacement options:
- Conventional DST (Delaware Statutory Trust)
Fractional beneficiary interest in a portfolio of multifamily or commercial real estate
- DST to UPREIT
Ultimately invest in a large REIT portfolio of diverse commercial real estate, potentially with quarterly redemptions, after an initial investment in a single DST property
- “GLIDE” DST (Ground Lease Interest in Development)
Long-term ground lease in which the tenant pays rent while developing the property, with the intent to buy back the fully leased-up property
- Oil and Gas Interests
Basket of fractional interests in multiple properties producing oil/gas royalties
- TICs (Tenants in Common)
Direct fractional interest, on title, with up to 34 other investors in a managed property
- Single-Tenant NNN-Lease Retail or Restaurant
Common structure for owning stand-alone fast-food or other chain retail stores
Many of these programs offer pre-arranged financing requiring no application or qualification from investors. Most include an objective to provide potential income. The first four options require no escrow process to invest, and all but the last option require that investors be “accredited”.
To learn more about passive replacement options for 1031 exchanges, please visit our website at 1031capitalsolutions.com or give us a call at 1-800-445-5908.
This information is for educational purposes only and does not constitute direct investment advice or a direct offer to buy or sell an investment, and 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. Because investor situations and objectives vary, this information is not intended to indicate suitability for any particular investor. The views of this material are those solely of the author and do not necessarily represent the views of their affiliates.
Investing in real estate and 1031 exchange replacement properties may involve significant risks. These risks include, but are not limited to, lack of liquidity, limited transferability, conflicts of interest, loss of entire investment principal, declining market values, tenant vacancies, and real estate fluctuations based upon a number of factors, which may include changes in interest rates, laws, operating expenses, insurance costs and tenant turnover. Investors should also understand all fees associated with a particular investment and how those fees could affect the overall performance of the investment.
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). 1031 Capital Solutions is independent of CIS, CAM and CIA.
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