All Forum Posts by: Kyle Kadish

Most will charge somewhere between $1,000-$1,500. They will vary based on exchange value and number of transactions.

@Matthew Ryan Most investors I see heading into OZs either:

- part of an entity, i.e. partnership, that sold real estate and didnt conduct a 1031 exchange, or

- took gains from other asset classes and new to real estate investing.

Census tracts are all over the country, step ups in basis are attractive, and all future gains tax free beneficial, however 10 years is a LONG time.

@Tim Zajicek

My clients have found them very useful not only for passive ownership, but appreciate their flexibility with investment amount and portfolio diversification (by sponsor, tenant, type, liquidity, and geography.) Can be used for a plan b in identification, absorb debt in an exchange, or using all of the proceeds to complete an exchange.

Biggest objection is lack of say with timing; the sponsor/trustee makes all decisions on when portfolio is liquidating.

Good luck!

@Huynh Do

Yes, the internal revenue code allows you to complete an exchange in any of the 50 states. Sell and buy wherever.

The objective is to use all of the proceeds from the sale for replacement propert(ies). If you only plan on using 400k for purchase, an exchange might not be appropriate - pay the taxes on the gain (and depreciation recapture). If you want to defer all tax liabilities, use the net proceeds.

In addition to the 400k for the Texas property, you could consider a Delaware Statutory Trust or TIC, or any other property to complete the exchange.

@Isaac S. You are right, DSTs have their positives.  The biggest detractor is limited control and timing of exit.

Regarding your low debt position today, it puts you in an odd spot with DSTs that have either no debt or 50+% LTV. The balance is blending different DSTs to achieve an efficient LTV.

If they were not working well for investors, DSTs would not continue to attract the capital they are year over year....something is working right.

@Dave Foster points out other structures as well with more control, yet still produce attractive passive income.  Again, all of these options are available to be used in concert to match every last dollar in your exchange.

Good Luck with next steps!

@Devan R.  Congratulations on being in a great position and knowing about 1031 exchanges before the sale.  Your objective is to purchase 'equal or up' in the exchange - use the full $150k on the replacement properties.  How you do this is completely up to you.  If your Missouri property is free and clear, you will have $150k to use for down payments on what you purchase.  Putting 20% down for each will make the financing easier.  With that $150k, you could use 75k as down payment on two properties, and finance the rest of their purchase, or split it up (125k for one, 25k for the other).  

The second question comes down to who the 'taxpayer' is.  If you and your wife file jointly, then you are both the 'taxpayer' in the exchange and titling on the replacement properties can be adjusted to reflect that.

You'll soon see replies from @Dave Foster on the exchange, as well as some CPAs that often chime in expanding on each point.

@Eric Nelson one strategy using the installment sale is the Deferred Sales Trust. It allows the taxpayer to structure tax payments over anytime, while the capital is put to work through real estate, private equity, stocks and bonds, or any other investment. It has been successfully used for nearly 25 years. In addition to businesses, it can be used for personal or investment real estate.

@Joe Kim Conservation easements reduce income, not capital gains. If selling three properties, I'd imagine your concern is gains. Three ideas you might want to explore instead are 1031 exchanges, Deferred Sales Trusts, or Opportunity Zones.

@Grace Porritt. Interesting idea.

There might be an easier way to achieve the same outcome if the buyer is able finance the entire price, you might want to explore a Deferred Sales Trust. The property is sold, and seller schedules when taxable events are created in the future.

The efficiency is created with a gain/depreciation recapture of at least $250,000. You might be above that threshold where it would make sense.

@Nikolai Alex Two substantial differences between Opportunity Zones and 1031 Exchanges: with an OZ, no QI os needed, and you can take your basis free and clear.