1031 Exchanges and DST's with Rick Martens of Inland Capital

A Strategy Guide to Retirement Planning with Terry Martine

We talk with Rick Martens, Sr VP of Inland Capital to discuss answer a few questions. What is a 1031 exchange? Why do people use them and why are they becoming more popular? And finally we look at a few of the qualifications and why using a Delaware Statutory Trust (DST) meets the needs of many investors. Here's a brief history of the 1031 exchanges.
A 1031 exchange allows real estate investors to defer tax liability on the sale of an investment property by using the sale’s proceeds to purchase a new property. The basic idea is that if the investor didn’t actually receive any proceeds from the sale (making sure to use a Qualified Intermediary (QI)), then there isn’t any income to tax.
The 1031 exchange can include like-kind property or it can include like-kind property along with cash, liabilities and property that are not like-kind. If you receive cash, relief from debt, or property that is not like-kind, however, you may trigger some taxable gain in the year of the exchange. There can be both deferred and recognized gain in the same transaction when a taxpayer exchanges for like-kind property of lesser value.
The taxes can be deferred indefinitely (exchange till you drop) as long as no monetary benefit is ever received from the sale of a property. For example, if you complete a 1031 exchange, hold that property for several years, and then sell it and buy another property, you can continue to use this method to avoid paying taxes. In other words, if you never "cash out," you can defer taxes forever.
If you want to contact us about a potential 1031 exchange you can call us at 954-683-1393.
FRS Investment Advisors, LLC