1031 exchange Info – Tax Deferral Capital Gains
What is a 1031 exchange DST Info?
A 1031 exchange provides an alternative strategy for deferring the capital gains tax that may arise from the sale of a rental real estate, secondary residence, vacation home, apartment building, or commercial building.
By exchanging a sold piece of real estate for like-kind real estate, real estate owners may defer their federal
taxes from the capital gains and use all of the proceeds for the purchase of replacement real estate.
Whether any particular transaction will qualify under Section 1031 depends on the specific facts involved, including,
without limitation: the nature and use of the sold real estate and the method of its disposition; the use of a qualified
intermediary and a qualified 1031 exchange escrow, and the lapse of time between the sale of the
relinquished real estate and the identification and acquisition of the replacement real estate.
What is like-kind real estate when referring to a 1031 exchange?
Set forth below are some examples of like-kind real estate in regards to a 1031 exchange
• Unoccupied land
• Commercial real estate, including commercial rental real estate
• Industrial real estate
• 30-year or more leasehold interest
• Farm land
• Apartment building
• Residential rental real estate
• Doctor’s own real estate
• A tenant-in-common ownership interest in an investment real estate
• A beneficial Interest in a Delaware statutory trust, or “DST.”
What is a Delaware Statutory Trust or DST in a 1031 exchange?
In brief, a DST is a Delaware Statutory Trust in which an owner, or beneficial owner of real estate and use a 1031 exchange DST to defer the capital gains from the sale of real estate into a statutory trust in 1031 exchange for a fractional investment into an investment pool for similar real estate. The 1031 exchange DST is a huge tax savings for the owner of the real estate to defer paying taxes on the capital gains from the sale of the real estate.
What are some key guidelines for a Section 1031 exchange DST info?
In a 1031 exchange The seller cannot take receipt of the cash in a sale of the real estate. The money must be deposited with a Qualified
Intermediary in order to qualify for the 1031 exchange.
• The replacement real estate must be “like-kind” to the recently sold real estate. Both the relinquished and the
replacement properties must have been held for investment purposes or for productive use in a trade or
business in a 1031 exchange DST.
• The replacement real estate must be identified within 45 days from the sale of the original real estate.
• The replacement real estate must be acquired within 180 days from the sale of the original real estate in order to enter into a 1031 exchange DST.
• The cash invested in the replacement real estate must be equal to or greater than the cash received from the sale
of the recently sold real estate in a 1031 exchange DST.
• In a 1031 exchange DST the debt placed or assumed on the replacement real estate must be equal to or greater than the debt received
from the relinquished real estate.
This is a summary of some of the key guidelines for a transaction under Section 1031, but this is not an exhaustive list.
The costs associated with a Section 1031 exchange may impact the returns and may outweigh the tax benefits of the
transaction. Each prospective investor must consult his or her own tax advisor regarding the qualification of a particular
transaction under Section 1031.
How does a 1031 exchange DST work?
There are three basic steps in any 1031 exchange DST info:
• Seller sells real estate and proceeds are escrowed with a
QI for the 1031 exchange DST to work.
• QI transfers funds for purchase of replacement
real estate for the 1031 exchange DST.
• In an 1031 exchange DST that involves an investment in a DST, seller receives beneficial interest in a
In a 1031 exchange DST – Can I keep some cash for personally?
Investors may take some cash from the sale of the real estate before the cash is sent to the QI. This
is known as “boot.” The investor will pay capital gains tax on the cash taken but not the balance that were reinvested in the 1031 exchange DST. The seller may identify multiple replacement properties in this 1031 Exchange Overview. There are certain additional rules to keep in mind, including the following info:
• 3 Real estate Rule in a 1031 exchange DST info: The seller may identify any three properties, without regard to their fair market value.
The seller may acquire one, two or all three of the properties as replacement properties.
• 200% Rule in a 1031 exchange DST: The seller may identify any number of properties, provided the aggregate fair market of all of
the identified properties does not exceed 200% of the aggregate fair market value of all of his or her relinquished
real estate in a 1031 exchange DST info.
• 95% Rule in a 1031 exchange info: The seller may identify any number of properties, without regard to their value, provided the
seller acquires 95% of the fair market value of the properties identified.
INQUIRING ABOUT A 1031 EXCHANGE DST INFO
If you are interested in speaking directly about a for more 1031 exchange DST info, would like more information, or a consultation on a 1031 exchange DST you can email firstname.lastname@example.org or call – 805-603-4378.