Most 1031 exchanges are done for like-kind real estate. One type of property that many investors don’t consider when it comes to 1031 exchanges is the REIT, or Real Estate Investment Trust. REITs can be a great vehicle for deferring your taxes with a 1031 exchange. In this article, we are going to offer up a primer on Real Estate Investment Trusts (or REITs for short) and how they can be used in a 1031 exchange.
Real Estate Investment Trusts Explained
A Real Estate Investment Trust is a company that owns income-producing real estate and distributes dividends to the owners. REITs need to satisfy several guidelines in order to exist. For example a REIT needs to be taxable as a corporation, invest at least 75% of its assets into real estate, and have a minimum of 100 owners. REITs are also divided into different categories based on the type of real estate owned (office REITs, healthcare REITs, etc.).
Real Estate Investment Trusts can be exchanged in a 1031 transaction so long as they are exchanged for similar (like-kind) REITs. Doing so allows you to defer your capital gains taxes on the sale, and keep your hard-earned money working for you in a continued property investment.
MN Real Estate Exchanges
Selling investment real estate comes with a big capital gains tax bill. Why not avoid that tax bill by deferring your capital gains taxes with a 1031 exchange? The qualified intermediaries at CPEC1031, LLC can help you through all the required steps of your like-kind exchange – from the closing of your relinquished property to the purchase of your replacement property. Contact our 1031 exchange professionals today with any questions regarding your transaction. We are located in downtown Minneapolis, but work with clients across the United States.
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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