SYNDICATIONS FOR 1031 EXCHANGES/ CAPITAL GAINS

[Mike Miller]

1. Can anyone recommend a solid syndication that accepts 1031 exchanges, preferably Multi Family?

2. If I have a property in a 1031 exchange and I am looking to sell it, I will be on the hook for capital gains and depreciation recapture.  Will performing a cost segregation study during the same year offset the above noted taxes?  If so, I am guessing the study would have to be performed before the sale?

THX!!

Michael

[Jim Pfeifer]

Why do a 1031 exchange - especially if you are going to invest the proceeds into syndications?  You can do what my accountant calls a "Lazy 1031".  Once the asset is sold, invest the gains and/or proceeds in multiple syndications that do cost segregation and bonus depreciation.  This will allow you to defer the taxes on your gains from the sold property.  I sold most of my active investments that had significant gains and invested in syndications and deferred/reduced/eliminated all of the capital gain.  Of course, similar to a 1031, in order to continue deferring the tax, you will need to reinvest in syndications when your original syndications sell but it is easier and much more flexible than a standard 1031 exchange.  You need to select the right syndications to make sure you get maximum depreciation, but depending on your specific situation it could be an effective alternative.

Please note, I am not a financial or tax advisor, so definitely check with your CPA!  

Here is a blog post I wrote about the subject.