1031 exchange

Which Investment Options Qualify For 1031 Exchanges?

You may be planning a 1031 exchange to swap your non-performing asset with a premium property and defer up to 100% capital gains tax. The proceeds obtained from the sale of your old property can be reinvested in multiple assets. However, you must locate potential replacement properties that you would like to buy. A 1031 exchange property list can help you select high-performing assets. However, if you don’t have a property list, you can look out for alternate buying options that qualify for a 1031 exchange. DSTs, TICs, Net Lease, etc., are some of the investments that qualify for 1031 exchanges. You can invest your 1031 proceeds in any of these or can also split the proceeds and invest in multiple assets.

For Best, Passive Investment Returns Invest in DSTs.
It might be possible that you don’t want to own an entire property all alone? Owning an investment asset guarantees a regular monthly income flow but also invites the burden of landlord responsibility. When you own a DST property, you no longer need to interfere in property management as such properties are managed by asset managers. You can find premium properties in a DST portfolio, and you can invest in more than one DST properties at one time. DSTs have a large structure, and you may find a hundred or even more investors in a DST. DST investment provides a great opportunity to diversify your portfolio by adding different grades of properties.

Invest in Net Leased Properties to Enjoy Stress-free Investment.
An investor decides to sell a property mainly because of two reasons – rigorous landlord responsibilities or poor income. You can get rid of both obstacles by investing in a triple net (NNN) property. A triple net lease asks the tenant to pay operating expenses or property dues instead of the landlord. So, you don’t need to lose a part of your monthly income in paying operating costs. In addition, you can save time that you will be wasting in tracking bills and paying them.

TIC can be a wise investment selection if you don’t want to bear the burden of managing your property all alone.
Tenancy-in-common or TIC investment provides you an opportunity to own high-performing investment properties in partnership with other investors. A TIC can accommodate up to 35 investors. TIC properties are highly-rewarding, and you get to own one such asset when you sign a TIC agreement. TIC investments also qualify for 1031 exchanges. This gives you an opportunity to reinvest the proceeds from your old property’s sale into a TIC property and defer capital gains tax.

As TICs let an investor co-own an investment property with one or more investors, it is a great tool for small or medium-sized investors who want to own big investment properties but don’t have the funds to purchase it. Do not mistake a TIC investment with joint tenancy because they both are different investment structures.

Invest in TIC Properties and Complete Your 1031 Exchange.

Benefits that Come with a TIC Investment
•Own premium properties – Let’s assume you always wanted to buy a premium income-producing asset but never had the required capital. However, you can accomplish your dream of buying such properties by signing a TIC agreement.
•Steady income – A TIC investment offers monthly income, appreciation, tax benefits, etc. With a TIC property, you are likely to get big companies as tenants with high credit ratings, which means the possibility of default is quite lower.
•Risk is divided – The best thing with a TIC investment is that you don’t need to look after the property all alone. As in a TIC, up to 35 investors co-own the same property; the financial risk is equally divided among all the investors. Therefore, if the property you purchased gets damaged in a natural disaster, every investor will have to contribute to its repair.
•Choose your heir – Another reason why a TIC investment is popular is that it allows you to choose an heir for your property. Your heir will receive the property title and shares after your death (everyone has to die one day).
•You own the entire property – A TIC investment has a shared ownership structure, yet every investor owns the entire property and not a specific portion.

Just as it happens in any other investment, TICs also have a few limitations. For example, if you mortgage the property, things may get complicated as every property owner needs to sign the mortgage documents. The loan interest is equally divided among all investors. However, if any of the co-owner of the property denies paying their share of interest, you and the rest of the investors will have to cover the deficit. Plus, in case of a default, the lender has the right to claim the entire property, and you may lose the ownership even if you keep paying your share of interest.

As a TIC investment has potential risks, we recommend you speak to a TIC investment professional or advisor before investing.

Identify Your 1031 Exchange Replacement Property without Wasting Time.
When we talk about 1031 exchange property identification, you only have two options – keep looking for properties until you find an ideal replacement option or find an alternative. The first option requires planning in advance and a lot of effort. For example, you will have to make a list of 1031 properties that you might want to purchase. With a 1031 property list, you may close the identification before the deadline. You can also reach out to a local broker in your area. If you agree to pay some fee, they will provide you the list of available properties. You can also wander on the websites of real estate firms that facilitate 1031 exchanges.

Another option is to find an alternative investment structure that qualifies for 1031 exchanges, like DSTs or TICs. By investing in a DST or TIC property, you don’t need to locate several properties and then choose one.

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Disclaimer

1031Sponsors.com is a web portal owned by Investment.Net, LLC. The company is functioning in the 1031 exchange market for more than 15 years. Neither Investment.Net nor 1031Property intend to act as a broker or sell any goods or services. 1031Sponsors does not offer legal or tax advice. Tax topics discussed are for educational purposes only and should not be considered professional tax advice. It's recommended that you discuss your situation with your tax or legal advisor. Distributing an investment in different assets or choosing alternative investments involves higher risks than traditional investments and shouldn't be taken for granted. All alternative investment strategies are sold along with a prospectus that discloses all risks, fees, and expenses. These investments are not tax-efficient, and an investor should consult with his/her tax advisor before investing. The investor should be prepared to bear loss knowing that financial risks are attached to such investments.

1031Sponsors help investors residing in the United States complete their 1031 exchanges by providing them well-researched and authentic information related to 1031 exchanges. Services listed on the website 1031Sponsors.com can be modified to make them relevant to the present investment situation in the United States. For additional information, please contact 888-876-6005.