Re-imagining
1031 Tax Deferred Investment Solutions
“We’re going to give you our money. We worked really hard for it. Please don’t lose it.” These were the words from a third-generation farm-owner who had just made one of the most pivotal decisions of his life… To sell the family farm that had provided a living, built a family, and established a legacy for the next generation. As I sat across the kitchen table with the patriarch, his daughter, and granddaughter, I was reminded that the most valuable form of currency isn’t money—it’s trust. Trust is the foundation of relationships and starts with shared values and aligned interests. We are seeing the perfect storm with the convergence of highly appreciated property, aging demographics, and the desire to transition from the burden of day-to-day property management to passive lifestyle income. With recent increases in property values of agricultural land1 , we believe investment property owners are more motivated than ever to explore their exit strategies through 1031 tax deferred reinvestment options. For many active property owners, the hardest part of the hold/sell decision is letting go of the familiar…to embrace the unfamiliar. Any worthwhile investment solution begins with education and trusted research. Under IRS 1031 exchange rules, sellers of investment property can defer capital gains and other taxes, provided they reinvest proceeds into another qualified investment property. However, at its core, a 1031 tax deferred exchange should always be a fundamental investment strategy first and a
tax strategy second. The surging demand for investment real estate has resulted in a limited supply of quality 1031 replacement properties. As a result, many investors can be hesitant to sell their relinquished property until they have reasonable assurance of locating and closing a suitable 1031 replacement solution. So, what are generational farmers, ranchers, sporting and lifestyle property owners to do when evaluating the hold-versus-sell decision? Is it possible to achieve both tax deferral and preservation of investment value in this competitive real estate market? Is there an integrated 1031 solution that combines tax deferral with potential streams of passive income, simplified estate planning, and diversified real estate holdings? If you are asking these questions and ready to transition from actively managed property to passively owned investment real estate, then read on…
