Answer
Sep 18, 2025 - 01:39 PM
A 1031 exchange is like a normal real estate transaction with key differences. A qualified intermediary (accommodator) educates you, safeguards your money, and helps defer taxes. To defer capital gains tax, the money cannot hit your bank account at closing. You must identify a replacement property of equal or greater value than the property you're selling. The proceeds consist of debt and equity. If selling for $1M, you need to identify a property worth $1M. If there's $500k debt & $500k equity, you need to match it or bring $500k cash to offset mortgage boot. A DST qualifies as a replacement property, offering fractional ownership (like a limited partner) in a professionally managed property generating passive cash flow. Before moving from the DST to the 721/private REIT, the IRS typically requires a two-year seasoning period. Then the DST is folded into BMIT, giving you access to a portfolio of properties instead of just one. I'm happy to schedule a private call to discuss further.
