The July 15 Exchange Deadline is Almost Here
Written by Nathan Kuhn July 2, 2020
July 15th is likely a day circled on the calendar of many people looking to complete a 1031 exchange. When the IRS issued Notice 2020-23, exchange transactions that fell between March 31, 2020 and prior to July 15, 2020 saw their deadline extended to July 15, 2020. In light of the COVID pandemic, the IRS issued this notice to provide extra time to complete an exchange. Certainly, I think we all were hopeful that by this time the worst of the pandemic would be behind us. Unfortunately, that does not seem to be the case.
With our country still in the midst of the pandemic, it may make it difficult for investors looking to exchange—to view property, inspect property, or obtain financing. Additionally, I have heard that the inventory of available property has been limited.
A Delaware Statutory Trust May Help
The Delaware Statutory Trusts (DSTs) may be a solution to these challenges. (Read more about DSTs from our previous blog post.) For many individuals, investing in a DST may be their preferred solution when exchanging. DSTs can offer potential income and potential appreciation while deferring taxes through fractional ownership of property, among other benefits.
Investors whose original intent was to buy property directly and continue to manage it themselves, but who were unable to complete their desired exchange as a result of the current pandemic, could consider a DST to complete the exchange. Since the DST already owns the asset and due diligence, financing, and other pre-purchase necessities have already been completed, it allows for an investor to evaluate and, in most cases, close on a DST in just a couple of days.
Our inventory of DST investments continues to remain strong. I do, however, anticipate a surge in demand in the coming weeks as the July 15th date nears, which might lead to some amount of limited inventory. If you’re in an exchange and interested in learning more, please do not hesitate to reach out to our team.
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Whether you're thinking about selling a property and want to better understand the 1031 exchange process and investment choices, or if you already sold your property and the proceeds are currently held at a Qualified Intermediary, we can help.
Please call us at (224) 245-5281 or schedule an introduction today.
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The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the sponsors Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years, and reasonably expects the same for the current year) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Because investor’s situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
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