Question 1

What is a 1031 exchange?

Accepted Answer

A 1031 exchange is a tax-deferred exchange that allows you to sell investment property and reinvest the proceeds into new property while deferring capital gains taxes. Named after Section 1031 of the IRS code, it's a powerful wealth-building tool for real estate investors.

Question 2

What qualifies as 'like-kind' property?

Accepted Answer

For real estate, 'like-kind' is broadly defined. You can exchange any investment property for any other investment property - for example, an apartment building for raw land, or a rental house for a commercial property. The key is that both properties must be held for investment or business purposes.

Question 3

Can I do a 1031 exchange on my primary residence?

Accepted Answer

No, 1031 exchanges are only for investment or business properties. However, if you've converted your primary residence into a rental property and can demonstrate investment intent (typically by renting it for at least 1-2 years), it may then qualify.

Question 4

How much can I save with a 1031 exchange?

Accepted Answer

The savings depend on your specific situation, but investors typically save 20-40% of their profit in combined federal and state taxes. For example, on a $500,000 gain, you might defer $150,000 or more in taxes, allowing you to reinvest that money for greater returns.

Question 5

What are the key deadlines in a 1031 exchange?

Accepted Answer

There are two critical deadlines: You have 45 days from closing on your sold property to identify potential replacement properties, and 180 days total to close on the replacement property. These deadlines are strict with no extensions.

Question 6

Can I identify more than one replacement property?

Accepted Answer

Yes! You can identify up to three properties of any value (3-property rule), or any number of properties as long as their combined value doesn't exceed 200% of your sold property's value (200% rule).

Question 7

What if I miss the 45-day deadline?

Accepted Answer

Missing the 45-day identification deadline will disqualify your entire exchange, making all capital gains immediately taxable. This is why it's crucial to start your property search early and work with experienced professionals.

Question 8

Can I take some cash out during the exchange?

Accepted Answer

Yes, but any cash taken out (called 'boot') will be taxable. To defer all taxes, you must reinvest all proceeds and acquire property of equal or greater value.

Question 9

What is a Delaware Statutory Trust (DST)?

Accepted Answer

A DST is a legal entity that allows multiple investors to own fractional interests in institutional-grade properties. It's 100% passive - professional managers handle everything while you receive monthly income and tax benefits.

Question 10

What's the difference between a DST and TIC?

Accepted Answer

The main difference is control and management. TIC investors have voting rights and more control but also more responsibility. DST investors have no control or management duties - it's completely passive. DSTs also typically have lower minimum investments.

Question 11

What are typical minimum investments for DSTs?

Accepted Answer

DST minimums typically start at $50,000, making them accessible to more investors. This is much lower than the millions often required for direct property ownership.

Question 12

Can I use multiple DSTs in one exchange?

Accepted Answer

Yes! Many investors diversify by investing in multiple DSTs across different property types and geographic locations. This can help reduce risk and provide more stable returns.

Question 13

How does Anchor1031 help with my exchange?

Accepted Answer

We provide end-to-end guidance through your entire 1031 exchange. This includes education, property identification, due diligence on sponsors and properties through our designated broker-dealer at Great Point Capital, LLC, coordination with qualified intermediaries, and ongoing support after closing.

Question 14

What makes Anchor1031 different from other firms?

Accepted Answer

We offer boutique, personalized service with institutional resources. Our team carefully vets every investment opportunity through our designated broker-dealer at Great Point Capital, LLC, provides transparent fee structures, and focuses on building long-term relationships rather than one-time transactions.

Question 15

What kind of experience does your team have?

Accepted Answer

Our team has accumulated significant experience throughout our careers in real estate, with $1.2B in equity placed, over 300 successful 1031 transactions, and more than 1,500 real estate transactions. We provide 24/7 client support to ensure seamless, stress-free exchanges.

Question 16

How does Anchor1031 perform due diligence on properties?

Accepted Answer

Every property offered through Anchor1031 undergoes a rigorous two-step due diligence process. First, it's meticulously scrutinized by a team of due diligence analysts at Great Point Capital, our associated broker-dealer. The opportunity is then reviewed and analyzed by our team at Anchor1031, evaluating real estate fundamentals, deal structure, and sponsor quality.

Question 17

Do I need to be an accredited investor?

Accepted Answer

For most DST investments, yes. Accredited investor status typically requires a net worth over $1 million (excluding primary residence) or annual income over $200,000 ($300,000 for couples). We can discuss your specific situation during a consultation.

Question 18

What kind of support do you provide during the exchange process?

Accepted Answer

We provide 24/7 client support throughout your 1031 exchange. In a 1031 exchange, time is of the essence with no room for delays. Our commitment is to do everything in our power to facilitate a seamless, stress-free transaction with a dedicated partner available around the clock.

Question 19

Do you offer investments for cash buyers who aren't doing a 1031 exchange?

Accepted Answer

Yes! While we specialize in 1031 exchanges, we also help accredited investors seeking passive real estate investments with their cash. You can invest in various passive real estate opportunities without needing to sell property first. These investments offer the same professional management, potential monthly and/or quarterly income, and portfolio diversification benefits as our 1031 exchange properties.

Frequently Asked Questions

General 1031 Exchange Questions

Timeline and Process Questions

DST and TIC Questions

Working with Anchor1031

Still Have Questions?

Disclosure

Tax Complexity and Investment Risk