1031 Exchanges for Leases
If you would like to learn the benefits of 1031 exchanges, turn to the premier 1031 exchange brokers from Calkain Companies.
1031 exchanges of real estate, also known as like-kind exchanges, are a great benefit for real estate owners and also lessees of property they have been renting for 30 or more years. In a 1031 exchange, the Internal Revenue Service allows for the taxes on the sale of real estate investments to be delayed. This type of transaction allows for owners and lessees to have notable savings.
While these types of transactions are cost-effective, they can often be difficult to conduct. There is a great deal of compliance to specific regulations and must occur during a tight timeframe. The 1031 exchange brokers from Calkain have over 15 years of experience representing owners and lessees in 1031 exchange transactions. We will walk you through the process and ensure every detail is explained and completed.
Thirty-Year Lease Holders
When many real estate investors think of the 1031 exchange, they often only view this as applicable to owners of real estate. However, this is not the case. The Internal Revenue Service views a lease the same as real property if it is for thirty or more years, including options. The lease will be considered a 30-year or more lease if it is originally written for 30 or more years or if there are renewal options that would allow for the lease to surpass 30 years.
For example, if the original lease was written for 10 years but there was an option for four five-year options to renew, it would qualify as a 30-year lease. This allows for lessees to be able to sell the interest and replace it with any type of real estate for a greater or equal value.
Is Only Real Estate Valid for the 1031 Exchange?
1031 exchanges and leases are commonly thought to be only for common real estate but many would be surprised to know that like-kind property expands to more than just buildings. Some other real estate that is valid for the 1031 exchange include:
- Cell phone towers
- Fast food franchises
- Retail buildings
- Mineral leases
- Gas and oil leases
Triple-Net Leases and 1031 Exchanges
A great benefit of the 1031 exchange for lessors is to be able to use the interest from their original property to then purchase a new property to use for NNN leases. Triple-net leases and the 1031 exchanges compliment each other very well for lessees as well as the lessors. This is because if a lessee is able to find a newer building to lease that has a triple-net lease, their rent will usually be lower and there won’t be as many costs associated with upkeep. This would allow the lessee to have a 30-year or more lease on the property, while being able to use the interest in the property to expand their business.
Schedule a Consultation with Professional 1031 Exchange Brokers
Our 1031 exchange brokers at Calkain have experience in handling all of these types of transactions. We are confident we will be able to handle your transactions smoothly and in compliance with all IRS regulations and rules. Our brokers are also well-versed in assisting with triple-net leases and 1031 exchanges to ensure both parties’ best interests are taken into account. While real estate investments are common, there are risks associated with them. Call the 1031 exchange brokers from Calkain at (703) 787-4714 to schedule a consultation.1031 Exchange Brokers