1031 Exchange | Casey Lesher | Corona del Mar Real Estate Expert

A 1031 exchange is a strategic & powerful tax deferral strategy that allows real estate investment sellers to defer taxes, if all proceeds are reinvested into like-kind investment property of equal or greater value. The Identification of replacement property must be done within 45 days or else taxes are owed. If used correctly, there is no limit on how frequently you can 1031 exchange and continue to accumulate tax free wealth.

45 Day Rule
- Once the sale of the property occurs, the qualified intermediary will receive the cash from the sale. You then have 45 calendar days to identify an equal or greater value replacement property or else you pay taxes.
180 Day Rule:
- You must close on your replacement property within 180 days of the sale of your old property.

The 3 Property Rule:
- Allows for identification of any three properties, that’s combined to be equal or greater in value from the property sold.
The 200% Rule:
- Allows for the identification of more than 3 properties, as long as the combined value does not exceed 200% of the property value sold.

A Delaware Statutory Trust is a separate legal entity created as a trust under Delaware law in which each owner has a beneficial interest for federal income tax purposes and is treated as owning an undivided fractional interest in the property. In 2004, the IRS released revenue ruling 2004 – 86, which allows the use of a DST to acquire real estate where the beneficial interest in the trust will be treated as direct interest in the replacement property for purposes of conducting 1031 exchanges.

Build generational wealth by continuing to reinvest and defer taxes until you pass away.

Build generational wealth by continuing to reinvest and defer taxes until you pass away.
Federal Capital Gains Tax
State Capital Gains Tax
Depreciation Recapture Tax
Net Investment Tax

Upon passing, heirs will receive a step up in cost basis eliminating taxes.
Through a DST, investors establish an intentional estate planning strategy that creates a flexible path to building multi-generational real estate wealth and passing down that wealth to their families. Heirs will take over professionally managed passive real estate vs actively managed rentals.

Can identify a DST within the 45-day window in case a traditional 1031 falls through.
Save taxes if a deal falls apart within the 45 day window.

Any equity leftover from the sale of an investment property that cannot be replaced at equal or greater than value can be reinvested in the DST to save taxes!
Example: $1M sale, ID an $800K replacement property…$200K can be invested in DST to fulfill the equal or greater than value 1031 rule. An investor can be passive and active at the same time.

DSTs come prepackaged with non-recourse institutional financing that can replace an investors debt obligation when completing a 1031 exchange.
The ability to sell, complete a 1031 without needing to qualify for a loan or take on a higher interest rate.

Rental Property Owners & 1031 Exchange