The Power of Long-Term Tax Deferral with a 1031 Exchange

Selling an investment property often comes with one big headache—capital gains taxes. But what if you could defer those taxes and keep your wealth growing? That’s where the 1031 exchange comes into play.

Named after Section 1031 of the Internal Revenue Code, this tool allows you to reinvest the proceeds from the sale of one investment property into another qualifying "like-kind" property. The result? Your tax obligation is deferred, allowing your investment to continue growing uninterrupted.

Key Benefits of Long-Term Tax Deferral

A 1031 exchange offers more than just tax deferral; it provides opportunities for investors to achieve financial goals and simplify their portfolios.

Deferral of Capital Gains Taxes: Defer paying taxes on profits from your property sale by reinvesting them. This tax deferral can continue indefinitely as long as you follow the 1031 guidelines.
Portfolio Growth and Upgrades: Seamlessly scale or diversify your real estate holdings by upgrading to higher-value assets or exploring new property types.
Simplified Estate Planning: Consolidate your investments into fewer properties or specialized options like Delaware Statutory Trusts (DSTs). These tools can simplify wealth transfers for your heirs.
Reset Depreciation Schedules: Increase your depreciable assets to maximize tax benefits.

What Makes a "Like-Kind" Property?

The term "like-kind" may sound restrictive, but the IRS defines it broadly. The properties involved must simply be used for investment or business purposes. For instance, you can exchange a strip mall for an industrial building or raw land for a multi-family complex.

Examples of like-kind exchanges include:

Duplex swapped for a medical office
Raw land traded for a retail space
Apartment building exchanged for a Delaware Statutory Trust

DSTs Making 1031 More Accessible

While traditional 1031 exchanges require active management, Delaware Statutory Trusts (DSTs) provide a passive alternative. DSTs allow multiple investors to co-own high-value properties, such as commercial spaces or industrial real estate, while still qualifying for tax deferral under 1031 rules.

At Medalist Holdings (NASDAQ: MDRR), we specialize in offering DSTs backed by single-tenant, triple-net lease (STNL) properties. These assets provide reliable, predictable income without requiring landlord responsibilities.

With our industry-leading OWN-YIELD platform, you can benefit from:

Deferred Taxes: Reinforce your wealth through DST investments.
Reliable Income Streams: Earn passive income from institutional-grade tenants.
Flexibility Through UPREITs: Optionally convert your DST interest into shares in a publicly traded Real Estate Investment Trust (REIT) for added liquidity.

Compliance Rules to Know

To take full advantage of a 1031 exchange, consider these critical guidelines:

Timeline:
1. Identify potential replacement properties within 45 days of selling.
2. Close on one or more of these properties within 180 days.
Title Matching: The same taxpayer selling the original property must purchase the replacement one.
Qualified Intermediary (QI): Sale proceeds cannot go directly to the seller. A QI must hold these funds to retain their tax-deferred status.

Why It Matters

For investors aged 60+, landlords seeking to simplify, or those thinking about leaving a legacy, 1031 exchanges paired with DST investments offer an unparalleled combination of tax efficiency, income generation, and estate flexibility.

Transparency and Expertise from Medalist

Unlike other strategies, Medalist Holdings emphasizes full transparency. From the diligence in vetting properties to offering flexible liquidity pathways through our publicly traded REIT, our management operates with your success as its primary focus.

Your Next Step

If you’re ready to defer taxes, grow your investments, and enjoy passive income, it’s time to start your exchange. Learn more about how Medalist's 1031 and DST solutions can work for you.