Finding the right replacement property is one of the most difficult aspects of a 1031 exchange of real estate. In this article, we discuss four replacement property options to consider for your 1031 exchange.
Find and buy 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 T-I-C
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.
Commercial Partners Title Company
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