An investment in real estate can provide unique investment portfolio benefits. Property owners may enjoy a steady stream of income, capital appreciation and property-related tax advantages. Yet some property owners may no longer be interested in actively owning and managing property, but still want an allocation to real estate.
Under the Internal Revenue Code Sections 1031 (IRC Section 1031) and 721 (IRC Section 721), an owner of appreciated real estate can exchange investment property for an alternative real estate investment and defer the capital gain taxes normally associated with divestiture. These tax-deferred exchanges allow investors to maintain 100% of their pre-tax exposure to the real estate sector, rather than paying a portion of the proceeds from a sale to the government in taxes.
In addition to the deferral of capital gain taxes, real estate exchanges allow investors to:
- Capitalize on the value of appreciated assets
- Continue to build wealth through real estate investments
- Diversify, consolidate or upgrade real estate holdings
- Potentially reduce ongoing management burdens
- Accomplish retirement and estate planning objectives
Dividend Capital affiliate, Dividend Capital Exchange, will raise capital in private placements exempt from registration under the Securities Act of 1933, as amended through the sale of beneficial interests in specific Delaware statutory trusts (DSTs) holding real properties, including properties currently indirectly owned by the operating partnership of Dividend Capital Diversified Property Fund Inc. (DPF), a diversified, non-public daily net asset value (NAV) real estate investment trust (REIT).
To learn more, call your tax advisor today to discuss whether an IRC Section 1031 or 721 exchange is right for you. Your tax advisor can provide you with more details and help guide you through the intricacies of the exchange process, ensuring that you satisfy all of the relevant Tax Code and IRS requirements.
ANY PROSPECTIVE INVESTOR IS ADVISED TO CONSULT WITH HIS / HER OWN TAX ADVISOR AND OTHER PROFESSIONAL ADVISORS TO DETERMINE IF AN INVESTMENT IN A REAL ESTATE EXCHANGE IS CONSISTENT WITH THE PROSPECTIVE INVESTOR’S INVESTMENT OBJECTIVES AND RISK TOLERANCE.
The information provided on this site is for information purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy or sell any securities.