Finding the ideal replacement property is one of the most difficult aspects of a 1031 exchange of real estate. In this article, we talk about four replacement property options to consider for your 1031 exchange.
Find a Replacement Property on your Own
Purchase traditional like-kind real property* for investment or business purposes. For example, this could be medical office buildings, industrial property, hotels, malls, retail stores, farm land, multifamily housing or other real properties.
Buy a Tenancy-in-Common Interest
Purchase a syndicated tenant-in-common interest in real property.
Eventually go into an UPREIT
Purchase a syndicated tenant-in-common interest in real property* and later contribute it to an UPREIT (IRC Section 1031 Exchange followed by a subsequent IRC Section 721 contribution of the property to an umbrella partnership real estate investment trust).
Buy a DST
Purchase a beneficial interest in a Delaware Statutory Trust (“DST”)* that holds real property investments.
* If you are purchasing like-kind real property to complete your 1031 exchange, you must designate (identify) your Replacement Property within 45 days after the closing of the sale of your old Relinquished Property. Consult with your advisors early and have a back-up plan in case you are unable to acquire your primary designated replacement property.
CPEC1031
Looking for help with your next commercial real estate transaction? You’ve come to the right place! At CPEC1031, we have decades of experience providing commercial title services to clients throughout Minnesota and around the country. Our team consists of title underwriters, escrow agents, closers, and more who are ready to help you through all the ins and outs of your transaction. Contact us today at our office in downtown Minneapolis to set up your appointment with our team of title experts.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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