Syndicates and 1031 exchanges

4 Replies

I'm looking into investing in some syndicates but one thing that isn't usually available is a 1031 exchange. Given that 1031 exchanges are one of the best ways to build wealth and defer taxation, how much of a consideration is that to those who have invested in syndications?

@Jerry Shen I took a securities class last fall held by Taylor, Trowbridge and Sidoti, who were excellent by the way, and I believe it has to do with the structure of the offering. It was touched on briefly last fall, but a syndicator would have to set up a TEnnant In Common (TIC) agreement for a 1031 Exchange to invest into an individual structure and have an entire separate management agreement to guide the relationship with the TIC. I would email Jillian Sidoti or a good Securities attorney to find out more info.

@Jerry Shen , syndicated products can be a huge part of a strategy that includes 1031 products.  They must be carefully structured but 1031's into syndications are very common.  @Mark Creason , and @Robert Hetsler and some others on the forums here deal in these heavily.

Hi @Jerry Shen , many of my clients have invested into syndicated type investments utilizing 1031 exchanges. Accredited investors can buy into institutional grade $50-125M projects with as little as $100,000 and diversify. Professionals with decades of experience and very impressive track records do all the heavy lifting for you. You get potential cash flow, tax shelter and appreciation. Loans are non-recourse. This is the world of Delaware Statutory Trusts.

Originally posted by @Jerry Shen :

I'm looking into investing in some syndicates but one thing that isn't usually available is a 1031 exchange. Given that 1031 exchanges are one of the best ways to build wealth and defer taxation, how much of a consideration is that to those who have invested in syndications?

There are very specific types of syndications that can qualify for 1031 Exchange treatment. Generally, syndications, joint ventures, partnerships are structured in such a way that the investor is not buying an interest in real estate but an interest in a security, which does not qualify for 1031 Exchange treatment. However, if the syndication is structured as a Tenant-In-Common Investment Property (TIC), Delaware Statutory Trust (DST) or perhaps even a Land Trust, it would qualify as a direct investment in real estate. The most common structure today is the Delaware Statutory Trust (DST).

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