Doing a Structured Sale of land in "exchange" for U.S. Treasuries.
Member since 2025 · 13 posts · 5 votes
Doing a Structured Sale of land in "exchange" for U.S. Treasuries.
9 Replies
- Member since 2025 · 111 posts · 123 votes1y
In my experience, no - with the (not so recent) changes, a 1031 exchange is only done for similar types of investments (defined generally as "like-kind" assets), with the vast majority being real estate for other investment real estate. Here is a good link for an article on this topice, which specifically notes that securities are disallowed for a 1031 exchange. www.irs.gov/pub/irs-news/fs-08-18.pdf
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication. - Member since 2025 · 13 posts · 5 votes1yThank you Jason for your reply. Yes, I understand that "exchanging" land for treasuries would not be allowed under tax code 1031. But I've been reading that the IRS would allow for tax deferred benefits for this type of an exchange with a properly conducted "structured sale", where the seller would not have any access to the funds involved, turing the transaction process. But I can't find much confirmation of that yet. I suppose the real question here, is whether or not a "structured sale" is a viable alternative to a 1031 exchange or a 721 exchange?
- Member since 2025 · 111 posts · 123 votes1y
Happy to help! Yes, a structured sale is an alternative to a 1031, but it does not generally involve an exchange. Rather, you will have a third party professional facilitate the purchase, the buyer will pay to the third party, and then the third party will purchase an annuity reflecting the price, which is paid to you over a set time. Thus, the capital gains are not avoid and the basis isn't reset, but you pay the capital gains over time rather than in a lump sum manner. PLEASE be sure to use a reputable, professional team to manage the structured sale if you go this route, as simply loans/payments over time will generally not suffice.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication. - Member since 2025 · 13 posts · 5 votes1y
Thank you Jason. I've been trying to avoid getting tied into another insurance product annuity because of the situation I'm in (probably soon to be passing this asset onto my heirs), and because of a bad experience I had with doing that once before. I wish I could just hold onto this property until my kids could inherit it with a stepped up cost basis, but circumstances are such that I really need to get rid of this property soon and get the proceeds into a long term passive income investment. I do have a good real estate attorney that can handle the closing of the sale of the property, but haven't been able to find a "qualified intermediary" to handle the re-investment/trust portion. Do you have any suggestions? I'm now looking into a DST (Delaware Statutory Trust) option. But that sounds complicated.
Thanks again for your input.
- 1yAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
@Eric Amundson Yes, a structured sale of real estate in exchange for U.S. Treasuries can be done, but it’s more nuanced than a standard 1031 exchange. What you’re referring to is often called a structured installment sale, and it can be a tax-efficient alternative when you're not planning to reinvest directly in other real estate.
Here’s what you need to know:
- How It Works: In a structured sale, you sell the property and receive payments over time, rather than as a lump sum. The proceeds are placed with a third-party assignment company (through a qualified intermediary) that purchases U.S. Treasuries or structured annuities to fund your future payments.
- Tax Advantage: This structure defers capital gains tax as the gain is only recognized when you receive the installment payments. This can smooth your tax liability across years and potentially reduce your marginal tax rate.
- Qualified Intermediary: You’ll need a QI or settlement company familiar with structured installment sales. Not all 1031 QIs offer this, so look for firms that specialize in structured installment sales, such as those partnered with reputable annuity or treasury-backed assignment firms (e.g., Allstate, MetLife, or independent settlement planners).
- Key Considerations:
- This is not a 1031 exchange. You’re not reinvesting in real estate, so Section 1031 does not apply.
- You must set the structure up before closing the sale. Once you take receipt of the funds or title transfers directly, the tax deferral opportunity is lost.
- The assignment company typically purchases U.S. Treasuries or annuities that match the payment schedule you select.
- Pros:
- Defers taxes without requiring reinvestment.
- Customizable payment schedules (e.g., monthly, annual, lump sum in future).
- Safe, stable backing via Treasuries.
- Cons:
- Less flexibility, terms are locked in once established.
- Not ideal if you may need liquidity sooner.
- Requires careful planning and experienced professionals.
Next Steps: Consult a tax advisor who understands installment sales, and work with a structured sale specialist. If you'd like, I can help you create a checklist or questions to vet potential intermediaries.
This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
INVESTOR FRIENDLY CPA®4.9242 Reviews - Member since 2025 · 111 posts · 123 votes1y
@Eric Amundson OOF, sounds like a story/history there, and sorry to hear you went through that. Very understandable, and under the circumstances it doesn't sound like the installment sale will be your best bet. I also 100% agree with What @Ashish Acharya said, and appreciate his level of detail (especially the key considerations and need for careful planning/experienced professionals)! If we are shifting back to the 1031 option, then our firm has had good success and regularly refers clients to Deferred - https://www.deferred.com/partner/anderson - for a great option when it comes to a qualified intermediary.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication. - Member since 2025 · 13 posts · 5 votes1y
Thank you Ashish,
That is exactly what I wanted to hear, that the proceeds can actually be tax deferred into Treasuries, through a QI. I really didn't want to receive regular installment payments from it, though, but that still sounds like the best option for me. I'm thinking that might get pretty complicated because liquidating treasures for that would not be easy. Perhaps a chunk of it could be put in treasuries, with a smaller amount being put into and insurance product type of annuity, from which the installment payments could be made.
Do you know if there would be a minimum annual amount of the original sale that would have to be paid out in installment payments every year?
- Member since 2025 · 13 posts · 5 votes1y
Thank you again Jason. That sounds like a great referral. It sounds like your suggestion about an annuity is going to be requiured in some way to pull of this plan that I am trying to construct.
What firm do you work for and what do you folks specialize in?
- Member since 2025 · 111 posts · 123 votes1y
@Eric Amundson Happy to help, and I will DM you details on our firm and team! Best of luck moving forward
Join the conversationCreate a free account to reply, vote on answers and follow this thread.