In the year 2002 there were a lot of people doing syndications of real estate. People figured out there were a lot of mom and pop shops looking for a place to land with their 1031 funds and those folks didn’t necessarily want to exchange into management intensive property like rental properties. As a result, syndicators were buying triple net lease property (Walgreens, CVS, etc.) and slicing them up into fractional tenant-in-common interests and selling those TIC interests to investors that needed a place to land with their 1031 exchange funds. That tactic was very popular until the great recession in 2008, during which the TIC model was heavily stressed. As a result, many TIC deals didn’t work out and these types of deals fell into the background.
Today the model that most real estate syndications adopt is that of a Delaware Statutory Trust. Let’s say that you purchase an Amazon distribution center and puts it into a Delaware Statutory Trust. The property is fully leased, financed, and stable. Now you decide to sell the beneficial interest in that trust to investors that need a place to land with their funds. You then start doling out percentages of that distribution center that’s owned in the DST. There’s only one mortgagor in this situation – the trustee. This makes things much simpler than the old TIC model – where you may have had dozens of different owners. This has become a very popular vehicle for real estate syndication and 1031 exchange.
Reap the Benefits of a 1031 Exchange
When you conduct a 1031 exchange of investment real estate and reinvest your sales proceeds into a bigger replacement property, you can reap the tax-saving benefits for years to come. In order to do so successfully, you need to make sure you are hitting the appropriate benchmarks and satisfying the litany of requirements set out by section 1031 of the Internal Revenue Code. The qualified intermediaries at CPEC1031, LLC are here to help you do just that. Contact our skilled and experienced 1031 accommodators to discuss the details of your exchange today.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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