There are far more owners who want to sell their rental properties than are currently listing them for sale. Why do they—or perhaps you—continue to hold properties they no longer want to operate? Common reasons include:
• Unsure or afraid of tax consequences
• Unwilling or unable to qualify for a new loan
• Discomfort in owning outside a local market
• Procrastination/dread of another transaction
• Fear of inability to find a similar or better property
As it turns out, for many people there are strategies that may address these concerns. Under §1031 of the Internal Revenue Code, you can defer—and potentially avoid altogether—your taxes when you sell your current rental, and invest in one of these passive replacement options:
3. “GLIDE” DST (Ground Lease Interest in Development)
Long-term ground lease in which the tenant pays rent while developing the property, with the intent to buy back the fully leased-up property
5. TICs (Tenants in Common)
Direct fractional interest, on title, with up to 34 other investors in a managed property
Many of these programs offer pre-arranged financing requiring no application or qualification from investors. Most include an objective to provide potential income. The first four options require no escrow process to invest, and all but the last option require that investors be “accredited”.
To learn more about passive replacement options for 1031 exchanges, please visit our website at 1031capitalsolutions.com or give us a call at 1-800-445-5908.