In order to avoid taxation via a 1031, one must exchange 100% of their proceeds. And, current DST’s can offer 4-5% immediate cash flow, but the opportunity for growth is limited due to current cap rates. Here is the alternative:
A Qualified Opportunity Zone Fund.
1) There’s no need for a QI and escrow account as this is NOT a 1031 exchange.
2) You can keep the cost basis. You only have to invest all or a portion of the capital gains within 180 days of your sale.
3) The portion of cap gains invested in a QOZ Fund does NOT have to be recognized (and taxed) in the current year.
4) That portion is recognized in 2026 (Payable April 2027), the amount gets a 10% reduction, and is taxed at the 2026 capital gains rates…could be better or worse.
5) The power of this strategy is that you get to invest 100% of your taxable capital gains TODAY…AND if the QOZ Fund is owned for 10 or more years, any future capital gain is tax exempt. That’s where the real benefit comes in.
6) Most of these QOZ Funds are development or re-development projects, so cash flow starts in years 3-5.
7) The actual investment objective is future cash flow and capital appreciation, expected to be far greater than a traditional DST.
I have attached a brochure sponsored by Griffin Capital which explains this much more eloquently than I can…
This is a sample offering. I am not a registered representative nor a licensed financial advisor.
Click here to see a sample offering
If you have any questions or want to speak to someone who is an expert in this topics let me know.
Lets get started, so my can keep what you earned on your long term real estate investments. This cycle will not last forever.