You Can 1031 Exchange into an Apartment Syndication

[Rick Martin]

The 1031 exchange has been a powerful vehicle for real estate investors to defer capital gains taxes. It has always seemed like the way to go, but I had this opportunity back in 2015, and even then, the time restrictions and available supply just felt like too much to pull off. The qualified intermediary with whom I spoke practically talked me out of it. I don't think he was aware of the type of properties one could exchange into, and for that reason, limited my view as I only opened my mind to a similar property. 

Had I only done more homework, and broadened my perspective, I may have discovered that I could take my gain and invest it into a real estate syndication and reap incredible rewards. We recently had an investor "exchange" into one of our syndications, and I have to say that I am a bit jealous. I think I would have preferred his $75k annual income stream to my $100k tax burden. Not to mention his healthy share of the backend. A generous chunk of equity can serve you well in this world. Be wise with it.

[Yonah Weiss]

@Joe Splitrock it would have to be done through a TIC structure as @Percy N. suggested above. This should have been made clear by the OP. In that case, the basis would transfer into the TIC, which you could continue to exchange upon the sale of that syndication. Otherwise, like any exchange, you are correct, that once you sell without a 1031 you will be hit with the capital gains, and recapture taxes.