The IRS does not consider REIT shares to be “like kind” property for the purposes of a 1031 exchange, so an investor cannot directly exchange REIT shares into a REIT.
Can You 1031 Exchange Into A Fund?
Investors can defer taxable gains on 1031 exchanges if they use the proceeds to invest in DST properties using the 1031 exchanges. As with a typical 1031 exchange, you must enter a 1031 into a DST.
What Is A 1031 Exchange Reit?
The 1031 exchange is a popular method for real estate investors to defer their capital gains tax when selling an investment property. An investor does not cash out and pay taxes on the proceeds of a property, but rather follows a set of rules in IRC Section 1031 to purchase a new property.
What Is A 1031 Exchange Fund?
Exchanges of investment properties for each other, known as 1031 exchanges, allow capital gains taxes to be deferred in real estate. Real estate agents, title companies, investors, and soccer moms are all familiar with the term, which is derived from the Internal Revenue Service (IRS) code Section 1031.
What Can You Invest In With A 1031 Exchange?
A 1031 exchange can be used to purchase commercial properties such as rental properties, condominiums, shopping centers, strip malls, timberland, gas and water interests, and land. Delaware Statutory Trusts and DST properties are examples of 1031 Exchange replacement properties.
Can You 1031 Into A Syndication?
The use of a 1031 Exchange in an Apartment Syndication is possible, but you must follow the proper “rules of engagement” to avoid any tax penalties or legal recourses.
What Is The Difference Between A Reit And A Dst?
The dividends you receive from a REIT are based on the number of shares owned by the company. Taxes on these dividends must be paid by you as an investor. A DST pays a yield of 4% on its passive monthly income. 5%-6. Taxes on DST are paid on ordinary income, not on capital gains.