What is the exit strategies for 1031 like kind exchange?

[Pauline Zhao]

What are the options for the exit strategies for 1031 like kind properties that are fully depreciated with zero tax basis left? Thank you!

[Dave Foster]

@Pauline Zhao, When you hold until death as @Christopher Smith is saying your heirs will get a step up in basis so the tax goes away and the property receives a new basis for the heirs.  A great way to go.  And probably the ultimate way since all roads lead there any way.  But meanwhile if you don't want to go gently into that good night - here's some other options.

1. Exchange into vacation rental property that you can have managed and use some for personal use and generate income off of as well.

2. Use the 1031 to purchase investment property that you later convert into a succession of primary residences.  By doing this you can ultimately get a portion of the profit tax free although you will have to re-capture depreciation.

3. Purchase managed properties that you don't have to touch - NNN or ground lease properties. Or large tracts of agricultural land that is share cropped out.

4. Go passive with DSTs and TICs which qualify for 1031 treatment.

Note that all of these are followed sooner or later by @Christopher Smiths suggestion.  Just trying to make it later.