All Forum Posts by: Kyle Kadish

@Scott Lewis. As others suggested, investing the gain in an Opportubity Zone is an option to defer the gain this year, let the money generate tax free earnings, and a discount on the current gain in the future.

Proceeds from sale are held in Deferred Sales Trust (arms' length distance from taxpayer).  Taxpayer has promissory note for proceeds on whatever terms they establish.

If sold for $2mm, and note pays 5% interest, taxpayer recieves $100k income per year, and hasnt touched principal (no capital gain).  Capital gains would be due year princioal is taken from the Trust.

The promissory note would be transferred to the heirs, and like earlier, they do not need to take principal - just use income.

A REIT is not allowed as a replacement property in a 1031 exchange. Whatever proceeds not used in the exchange will be taxed. Heirs would recieve the real estate at the then current market value (with no tax liability) after death.

Another option is to use a Deferred Sales Trust.  The pre-tax proceeds from the sale can be used to generate an income, and the taxpayer schedules what they owe, when they owe it.  There is no requirement to reinvest in real estate.

@Joseph Pratt @Dave Foster is a QI and frequesnt commenter on BP. Others can be found at 1031.org

@Michael Beur More sponsors are bringing DSTs to market than ever. Plenty of opportunitues exist, but I always look at Quality of sponsor, tenant, and property.

@JP Krueger it can be done for the portion used as investment.

If all three units are equal size, 1/3 of price would be personal and 2/3 investment. You are using 1031 for the investment and 121 for the personal use.

@Vijayakumar Paramasivam only gains are deferred on sale today when gains invested in Opportunity Zone. However, you could combine parts of the code to defer all.

For example, basis is 200k, depreciation is 300k, and gain 400k (net sale of 900k). 1031 exchange 500k and use 400k in OZ

@Jennifer Knestrick With 1031 out as an option, have you considered a Deferred Sales Trust? The ownership from the LLC would be sold to the remaining partner, your taxes would be deferred for the future, and assets may be invested anywhere (real estate or not)

@James Miller From your description it looks good.

- All seven properties are investment, correct?

- Find a separate Qualified Intermediary (QI)

- Net proceeds from sale will be available (after paying off mortgages). Replacement properties should be purchased at combined sales price less expenses.

- is there enough gain and depreciation on each of the seven to conduct an exchange on all?

@Fernandez Luckett if wanting to stay local, Exeter 1031 out of San Diego. There is no requirement that the QI be located in any state, so you could use one outside of CA if you wish.