1031 exchange - need feedback quickly
My 72 y.o. mother just sold her only property to simplify her life. She has $1.1M in a 1031 exchange and is planning on purchasing three to four Deleware Statutory Trusts (DSTs) that contain Class A, mostly large scale residential communities in growing, economically strong regions. The DSTs expect to deliver 5% to 6% cash on cash plus appreciation. The cost to buy in is 9.5% in commissions/sales fees.
If she pulls cash out of the 1031, she’ll be taxed heavily - 28% to 30% on the first $100k, 34% on anything over that. She has around 1 week to decide what to do.
How much cash should she pull out of the 1031 exchange? This money will be invested in Vanguard Lifestrategy Moderate Growth (a 60% stock / 40% bond fund) .
Living Expenses: $75k per year
Current Income: $50k/yr rent from real estate if her $1.1M in 1031 is invested in DSTs
$15k/yr Social Security
$30k/yr Limited Partnership (ends 2024)
Current Portfolio - $530k Cash (not including the $1.1M real estate)
We plan to invest her cash into 85% Vanguard Lifestrategy Moderate Growth Fund and 15% Vanguard California Intermediate-Term Tax-Exempt Fund
Thank you,
Jey