1031 Exchamge Question

[Sippy Hira]

Experienced investors- need some advice!

So my husband and I are going to receive net proceeds from a REIT investment at the end of this year. The investment was a 173 unit apartment complex. To defer taxes, can I use a 1031 exchange. I'm unsure if I can because it's not a "like" property.

And if I can’t, what options do I have to defer taxes?

Thanks!

Sippy

[Dave Foster]

Thanks for that shout out @David M..  Exactly correct @Sippy Hira.  In a 1031 exchange any type of investment real estate can be sold and replaced by any other type of real estate investment.  So like kind isn't the issue.

The issue is that you don't own real estate. You own a membership interest in an entity that owns real estate (the REIT). So when you sell you are not selling real estate. That's what makes this probably not qualify.

If by some odd chance the REIT let you invest as a tenant in common on the building then you do indeed own real estate at that point. And you can sell your % ownership of the real estate itself and buy new investment real estate of any kind.