In a 1031 Exchange, the replacement property must be “like-kind” to the relinquished property. The difference in type, grade and quality does not matter. Generally, any real estate held for business or investment purposes in the U.S. or U.S. Virgin Islands is considered “like-kind”. For example, a landowner can exchange a commercial property for another, or a residential rental property for a commercial property, and vice versa.
Replacement Properties
How to Choose
Between Active and Passive
How to Choose
Between Active and Passive
Active
Active ownership is as it sounds; the property owner manages the property and any issues that arise from that property. Property owners looking for active ownership typically buy nearby properties for ease of oversight. In doing this, they often sacrifice asset type and geographical diversification and are beholden to the tax regulations of that state. Another challenge active owners often encounter is the ability to find quality properties at desired prices within the timeframes allowed under the 1031 Exchange guidelines. Typical Active Properties: farm/ranch land, raw land, rental houses, apartments, small office buildings, self-storage properties, etc.
Passive
In our experience, we’ve found most people are selling their property in an effort to simplify their lives. As such, a passive ownership structure seems to suit them the best. A passive ownership structure is one where the property owner is “hands-off”. There are no weekend calls to fix water leaks or furnace issues. These structures have a management team in place to handle daily operations, maintenance issues and financial management. These typically provide a stress-free income stream for the property owners. For passive owners, the quality, history and track record of the management company is more important than geographical location. This allows for excellent diversification and potentially tax-advantaged income streams by buying properties in states with no or low state income tax. Typical Passive Properties: DST’s, UPREIT’s, etc.
Our Process
Learn how we work to ensure a smooth transaction.
We believe that our process is what sets us apart and makes us unique. When we work with you, we truly aim to understand your goals because without a grasp on what you’d like to accomplish, we can’t navigate to the destination. We’re also proud to work with connections we already have or with the relationships you bring with you, ensuring that you feel comfortable and confident in your team. With the help of a clear vision, we can help you strive toward the horizon and achieve the growth your land and your retirement so richly deserve.
