Snippet: Exchange Into a REIT

Exchange into a REIT

One of the most common questions I’m getting these days is, “Can I exchange my rental property into a REIT”. And if you’ve done any research on this topic there’s a good chance you’re confused at this point. While some people will rightfully tell you that you cannot exchange rental property into a REIT, there are also a lot of people out there promoting that very idea. So what is happening here? As bizarre as this might sound both positions are correct well you cannot 1031 exchange real estate directly into a REIT, there is a way to accomplish this goal through a two-step process

The process begins by selling rental property and doing a 1031 exchange into a Delaware statutory trust  (DST) then after some time has passed that DST is acquired by a REIT through a tax deferred 721 exchange. When that happens the investor’s interest in the DST converts to operating partnership units of the REIT. So in this way an investor can exchange their current rental property and ultimately end up owning shares of a REIT.

There are important qualification restrictions, time periods, and other important factors to consider before beginning the process of exchanging into a REIT. If you’d like to learn more about this topic, register for our webinar on May 29th using the link in the e-mail you just received.

There are material risks associated with investing in real estate securities and 1031 replacement properties, including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Please add these disclosures to the PowerPoint: IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax concepts; therefore, you should consult your legal or tax professional regarding the specifics of your individual situation. Investors may be affected in different ways by state and local taxes, such as income taxes, franchise taxes, privilege and use taxes, and other taxes and fees. IRC § 1031 is a complex tax concept; therefore, you should consult your legal or tax professional regarding the specifics of your particular situation.

This is for informational purposes only. 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. 1031 Capital Solutions is independent of CIS and CAM.