All Forum Posts by: Kevin Eisentrout

@Dave Foster ok that seems to be the best option up to this point. Then to complete the 721, how does a deal that is described in the link below work? What exactly does it mean to make a "fractional investment" in a property? Does that mean the seller would be responsible for finding a new property (that would satisfy the REIT requirements in a couple years), investing in this property, then at least 2 years later the seller is able to trade this investment for shares of the REIT. Am I understanding that correctly?

https://www.1031gateway.com/1031-exchange-rules/1031-exchange-alternatives/721-exchange-upreit/

@Dave Foster thank you for the info. What if the deal instead was set up as a lease option. Would the transfer of property be considered at the end of 5 years when the option is exercised?

Is it possible to structure a deal with seller financing and then do a 1031 exchange into a 721 exchange?

The background of the deal is that the buyer desires a low down payment and prefers seller financing. The seller is trying to minimize taxes as the property has doubled in value during their ownership and wants the proceeds of the deal to be liquid within 5-7 years in case they pass so the estate is easier to divide.

So far, both sides are on board with seller financing, 10% down payment, 30 year amortized loan with balloon payment at 5 years. Could the seller structure this deal in a way that at the end of 5 years the lump sum could be rolled into a REIT through a 721 exchange and avoid capital gains tax? Is there an easier way to accomplish this in a win/win scenario for each side?

I am trying to organize the purchase of an apartment building from a colleague. The building has doubled in value since he has owned it, and he does not want to take the huge tax hit from selling, but he does not want to 1031 exchange into another building. I’ve researched doing a 1031 exchange and converting to a note using seller financing, but many of the articles only discuss doing a portion of the purchase as seller financing. Is it possible/how difficult would it be for him to 100% seller finance the property to me and take ownership of the note using a 1031 exchange. Does anyone have any qualified intermediary’s to recommend? How much does a QI typically charge for this type of transaction?