Strategy, markets & tax-deferral thinking.
Clear, practical perspective on 1031 exchanges, DSTs, and building durable real estate wealth — written for owners and investors, not specialists.
1031 Exchange vs. DST: which is right for you?
Both defer capital gains tax — but only one keeps you in the landlord's chair. A practical guide to choosing between an active replacement property and a passive Delaware Statutory Trust.
You exchanged into a building your own business rents. The income just changed character.
Rent paid by a business you materially participate in is recharacterized as nonpassive, while losses stay passive. It quietly defeats the plan to absorb suspended losses with your own rent.
Spreading the gain instead of deferring it: the installment sale
Section 453 spreads a tax you will still pay; Section 1031 defers it. The trap is Section 453(i): ordinary recapture is due in full in year one no matter how little cash you received.
The losses on your return that a 1031 exchange does not free
Suspended passive losses are released by a fully taxable disposition, and an exchange is the opposite of that. They carry forward instead, and they can quietly make your boot tax-free.
What do you do with the last $80,000?
Buildings come in the sizes they come in, and your proceeds are a precise number. The gap between them is boot unless you plan for it before you identify.
The Phase I that comes back on day 38
CERCLA liability is strict, joint and several, and runs with ownership. The landowner defenses require all appropriate inquiries before you take title, and the 45-day clock does not care.
When borrowing makes the deal worse: negative leverage under a 45-day clock
Replace the debt or recognize mortgage boot. The rules push exchangers toward borrowing without asking what the borrowing costs, and above a certain rate each dollar reduces your return.
Selling the farm: sorting one sale into four different tax outcomes
A farm sale looks like one transaction and is taxed like four. The allocation between house, land, equipment, and grain is negotiated in the contract, not discovered afterward.
The gain you could not defer: what to do with 1031 boot
Boot is recognized capital gain, and capital gain has more than one exit. A qualified opportunity fund can reach equipment, entity interests, and cash boot that Section 1031 cannot.
The settlement statement lines that quietly create a tax bill
Exchange funds can pay the costs of transferring a property. Pay the costs of operating or financing it and you have created boot, on a transaction where nothing else went wrong.
What your heirs actually inherit when you die holding a DST
Section 1014 resets basis at death, erasing a lifetime of deferred gain and accumulated recapture. The harder questions are liquidity, the sponsor's clock, and what your heirs can actually do.
The seven things a DST is forbidden to do, and the escape hatch that costs you
Revenue Ruling 2004-86 keeps a Delaware Statutory Trust passive, which is exactly what makes your interest exchangeable. The springing LLC lifts those limits and may end your next exchange.
You moved out and rented your old house. What can you still exclude?
Renting your former home usually does not cost you the Section 121 exclusion. The nonqualified use rule bites in the other direction, and the clock you should be watching is three years.
Held for investment, or held for sale? The line that decides your exchange
Section 1031 excludes property held primarily for sale. Dealer status attaches to properties rather than people, and it is decided after the fact by whoever reads your records.
Can you 1031 into a property overseas? The border rule that surprises people
US and foreign real property are not like-kind under Section 1031(h). Foreign-to-foreign exchanges are fully available though, and three US territories sit in a strange middle ground.
What will selling really cost you in taxes?
Use our free calculator to estimate capital gains, depreciation recapture, and NIIT, then see what an exchange could defer.
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Occasional, substantive notes on tax-deferral strategy and replacement-property trends. No noise.