Tax Smart Real Estate Investors Podcast cover image

Tax Smart Real Estate Investors Podcast

235. Unlocking the Secrets of the "721 Exchange": An Overlooked Real Estate Exit Strategy

Aug 22, 2023
Partnership Tax Expert, Kaylyn Deaver, and Keith Nelson, Managing Partner of Dual City Investments, discuss the "721 Exchange" as a powerful real estate exit strategy. They explain the concept, benefits, and mechanics of contributing properties to a partnership fund. The speakers compare it to the popular 1031 exchange and emphasize the advantage of recognizing capital gains over a longer period. Learn more at dualcityinvestments.com.
28:04

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Quick takeaways

  • A Section 721 exchange provides tax-deferred strategy, enabling property owners to diversify investments while deferring capital gains tax.
  • Contributing property to a partnership fund under Section 721 allows property owners to receive a partnership interest without recognizing capital gains at the time of contribution.

Deep dives

Section 721 Exchange and Partnership Taxation

The podcast episode discusses the concept of a Section 721 exchange, which allows investors or property owners to contribute their property to a fund in exchange for a partnership interest, providing a tax-deferred strategy. The strategy enables property owners to defer capital gains tax and diversify their investments without the burden of day-to-day management. The podcast highlights the benefits of this alternative strategy compared to a 1031 exchange or a Delaware statutory trust (DST). It emphasizes the importance of understanding the nuances and seeking advice from legal and tax professionals to navigate this complex transaction effectively.

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