How Does a REIT Qualify for 1031 Exchanges?

Is it possible to move your 1031 Exchange into a REIT? Yes, it is! However, the process may not be as direct as you may think.

In order to qualify for a 1031 Exchange, an investor must identify another investment or like kind property to move the proceeds into. While REITs own a diversified portfolio of properties, you must move proceeds into a DST before the assets can be moved into a REIT.

What is a DST?

A DST is short for Delaware Statutory Trust. DSTs are pooled investment vehicles that purchase investment properties to help investors qualify for 1031 Exchanges. This helps qualify the 1031 Exchange because there is an identified physical property for investment proceeds to be moved into. Click here for 10 reasons to consider a DST.

Most DSTs work with larger REITs on properties they want to buy. Typically the REIT will later purchase the properties inside of the DST for their own portfolio. Those who did own a piece of the DST will now have shares of that REIT. This is how your 1031 Exchange Proceeds can be moved into a REIT.

Most of the time, DSTs are created for the sole purpose to be purchased by a REIT. Most REITs know investors want to move a portion of their proceeds to them, so they created this structure to make it happen.

IntelliVest Wealth Management works with the largest REITs and investment firms to help identify strong DSTs for 1031 Exchanges. If you are interested in learning more please feel free to contact us at (864) 598-0000.

1031 Exchange into a REIT
1031 Exchange into a REIT

Process of Moving a 1031 Exchange into a REIT

  1. Investment Property is Sold and Proceeds are moved to your desired QI (Qualified Intermediary).
  2. IntelliVest Wealth Management will work with the client to identified the DST the Client is comfortable moving their proceeds into.
  3. QI wires funds to the proper DST.
  4. DST is purchased by a REIT.
  5. Investor will receive fractional shares of the REIT.

Want to Learn More About the Benefits of Moving your 1031 Exchange into a REIT? Click Here!

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*IntelliVest Wealth Management is a Registered Investment Advisor Headquartered in South Carolina. This is not financial advice and is for educational purposes only. Please consult a financial professional to discuss your personal financial goals.