260. Tax Structuring Considerations for Transferring Real Estate Wealth to the Next Generation
Tax Smart Real Estate Investors Podcast
Exploring the Legacy Fund and Tax Structures for Real Estate Wealth Transfer
The Legacy Fund offers a way to minimize taxes and estate taxes by allowing investments starting from a three million dollar equity minimum. Individuals can contribute directly held property, use a 1031 escrow, or even assets that need quick sale then mix in a 1031 exchange with a 721 contribution. The legal structure plays a role; while individual ownership results in a 1031 exchange and a contribution later, multi-member entities can match a 1031 exchange with 721s of partnership interests. The Legacy Fund provides tax deferral and year-over-year savings, but has minimum requirements. For smaller investments, a DST structure might be more suitable, offering the ability to convert to a partnership structure after two years. However, DSTs lack value protection if asset values decrease before the conversion, making the Legacy Fund a more immediate solution for wealth transfer.
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