All Forum Posts by: Jon Taylor

The DST structure actually provides a 1099 to investors as well as a list of property building and land values…

Your cost basis is adjusted and carried forward, and any additional debt (non-recourse) is depreciable as new basis.

If you want to see a name-redacted sample return for a previous tax year, I could provide one. 

As @Dave Foster  said, each asset class needs to be evaluated with an understanding of the technical fundamentals that matter, AS IF you were purchasing those properties outright.

Questions like:

Were the properties purchased at the right price?

Are the properties being marked up before they are sold to investors.

How is the cash-on-cash being modeled? 

What are the assumptions that are being factored in - namely occupancy rate and rent per square foot per unit type - and how do they compare to the local market?

What are the terms of the debt?

What are the demographics of the area of it’s a net lease deal? (Population in the 5-mile, population growth, etc…)

I generally stay up to date on the current DST market, and I doubt there are 15 offerings that you'll think are attractive enough to invest your money in. A lot has changed in the last 3 months. And the 18 months before that. Some are great. Most are not… (IMO)

So, proceed with caution. 

Yes, likely, depending (how do you like that answer?).

The IRS is concerned about the tax-paying entity being the same on the relinquished and replacement side of the exchange. If the LLC is a *disregarded* entity, and the taxes and income flow through to you, individually, then you are the taxpayer performing the transaction, and it's likely that you can combine the exchange.

It's an accounting question that the accountants should answer. The 1031 intermediaries, like myself, have seen a lot of transactions and can comment on how they've seen accountants advise. 

@Dave Foster will chime in here. He may disagree with me, and if so, I'd take his advise :)

@Matthew Holland - You can. You can structure the acquisition as joint tenants in common on the replacement side, but you'll have to fulfill the obligations of your 1031 exchange with your proportional share of the acquisition. Replace the net sale price of your relinquished property and spend all of your net proceeds. You can own whatever portion of the replacement property that you choose in the joint tenants relationship. 

I’d be interested to connect with you!

DM me and I’ll share my contact info

@Joe Splitrock

Thanks. The disposition of the business and/or the property is something I hadn't thought about. That makes a lot of sense. 

 @Bruce Ah... yes. Interest is tax-deductable, but the amortization is not. Thanks!

@Greg Scott

Thanks for your input! That's helpful. 

I was thinking that because the rental income is depreciable, and the mortgage interest on the investment property is not a deduction, it may be beneficial to show as much rental income as possible. 

@Brian 

Another option is a Delaware Statutory Trust. This allows for up to 499 investors to participate as fractional beneficial interest holders in a syndicated real estate portfolio.

The language is important here: it’s NOT a limited partnership. But it has many similarities.

There are some DST posts on this forum if you do some searching.

I could go pretty deep down that rabbit hole with you if interested, but this format is difficult

The Springing LLC is a last resort to save a failing property. I've never been a part of that process, but I've heard lots of friends describe the experience.

As long as you are extremely confident that the model is based on realistic assumptions, then the Springing LLC wouldn't come into play.