Commercial Real Estate Direct Staff Report
A total of $1.4 billion of equity was raised on behalf of structured tax-deferred exchange vehicles last year, according to Mountain Dell Consulting. And during the first quarter, another $365.7 million was raised.
The data provides further evidence that the structured exchange business, which had nearly become extinct between 2009 and 2012, continues to strengthen. Last year's volume was up nearly a third from the $1.1 billion that was raised in 2015 and nearly double the $731.5 million that was raised in 2014.
But that's not surprising as the tax-deferred business always benefits from increasing property prices.
Section 1031 of the U.S. Internal Revenue Code allows taxes on gains from property sales to be deferred as long as proceeds are reinvested in like properties within a set period of time. Investors can sell one property and buy another, or they can sell a property and, through a structured vehicle, such as a Delaware Statutory Trust, or DST, or Tenant-in-Common vehicle, or TIC, buy stakes in a number of properties. As prices increase, property owners are more prone to...
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