Step 8: The taxpayer reports the 1031 exchange to the IRS when filing his normal tax returnsĪfter the replacement property has closed escrow the qualified intermediary will send a final accounting statement to the taxpayer.Step 7: Within 180 days of the close of escrow of the relinquished property, the taxpayer instructs the qualified intermediary to transfer funds to close and send 1031 exchange-related documents to the escrow company, and the sale closes with the closing statement showing the qualified intermediary as the buyer.Step 6: The taxpayer executes a purchase contract with the seller of the replacement property, making sure the cooperation clause is included in the purchase contract, and naming the qualified intermediary as the buyer of the replacement property.Step 5: Within 45 days of the close of escrow of the relinquished property the taxpayer identifies one or more replacement properties and sends written notice of this to the qualified intermediary.Step 4: Escrow closes on the relinquished property, with the closing statement showing the qualified intermediary as the seller, and sales proceeds from the relinquished property are sent to the intermediary and placed in a separate segregated trust account.Step 3: Sell the relinquished property, making sure to include a cooperation clause requiring the buyer to cooperate with the seller’s 1031 exchange, and instruct the escrow officer or closing agent to order exchange documents from the qualified intermediary.Step 2: Enter into a 1031 exchange agreement with a qualified intermediary, being sure to name the qualified intermediary as the principal in the sale of the relinquished property and in the purchase of the replacement property.
Step 1: Retain the services of a certified public accountant or an attorney with tax deferred exchange experience.There are eight steps common to any Section 1031 tax deferred exchange: How does an investment in a DST-Structured property differ from an investment in a tenants-in-common structured property?.As a result, the maximum pre-tax loss (excluding income tax considerations) is equal to the amount invested in the DST. Investors with interest in a DST property are protected from property liabilities held by the DST.Because the DST is the mortgage borrower, the lender does not require individual DST investor guarantees, nor does the lender require investors to submit personal financial information to qualify for the mortgage loan.A DST is a pass-through tax entity, which is not subject to federal income tax, nor to the Delaware franchise or income tax.Upon the sale of a DST property, the investor may engage in a 1031 exchange, even if the DST interest was purchased without 1031 exchange proceeds.Ability to create a diversified real estate investment portfolio.No daily property management obligations that come with sole ownership.Capital Gains are deferred, if investment is for a 1031 Exchange.The purchase of DST interests is simpler, faster and does not require as many documents as buying sole ownership of a property.There are numerous advantages to investing in a DST structured property offering. You should familiarize yourself with all risks associated with any investment product before investing. However, its accuracy or completeness cannot be guaranteed and actual rates may change due to legal or economic conditions.Īll investments involve risk including the possible loss of principal. NAS Investment Solutions, LLC has made this third-party information available from sources it believes are knowledgeable and reliable. These are only estimates and should not be taken as fact or considered a recommendation or personalized advisory advice. The information provided here is for your general informational purposes only.
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