1031 Exchanges: How Many Investors Can There Be?

For many investors, the allure of utilizing a 1031 exchange to reduce immediate tax liability and grow their portfolio is an irresistible proposition. Of course, after conducting a few successful exchanges on individually owned properties, a more experienced investor may be looking for ways to improve his or her portfolio.

A possible answer may be with fractional or co-ownership investments such as Delaware Statutory Trusts or Tenancies in Common. Each allows groups of investors to pool their resources and purchase more expensive – and potentially more lucrative – pieces of investment real estate than they could do on their own.

But one question on many investors’ minds is exactly how many other investors will they be sharing ownership with? While every individual transaction will vary, there are some maximum limits to ownership that an investor should understand.

Tenancies In Common – For 1031 exchange purposes, the maximum number of investor is capped at 35.

Delaware Statutory Trusts – Again, for purposes of a 1031 exchange, the maximum number of investors is 499.

While these may seem like high numbers to an investor used to single-owner investments, it is important to remember that the higher number of investors means the more resources available for purchasing premium commercial real estate.

To find out how we can help you find and close on your next 1031 exchange property or to learn more about the exchange process and our qualified intermediary services, please visit our website.