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1031 Properties

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Most completed 1031 exchanges involve the exchange of a business asset. These properties can be traded and traded with similar properties, including alternative real estate investments. These opportunities available to Perch Wealth can provide commercial investors with new strategies to improve their investment position.

Commercial assets include a wide variety of properties, and if your commercial assets meet the IRC's requirement of being similar in nature or character, they may differ in class or quality. As a result, investors can trade asset classes across the country through their 1031 exchange. Commercial properties include office buildings, medical centers, single-family homes, educational institutions, hotels and motels, retail stores and shopping centers, vacant lots and industrial properties. The owner investor must retain the full cost of simple ownership of the asset. Rental properties may qualify for a 1031 exchange; however, they must have at least thirty years left on the lease. Trading between asset classes can provide new opportunities that an investor did not have at the beginning of their investment career.


Investors who wish to relinquish management responsibilities but still benefit from a 1031 exchange can sell their relinquished property to a Delaware Statutory Trust, or DST, which qualifies as their replacement property. A DST is a real estate ownership structure that allows investors to buy a fractional interest in the trust's assets. The trust is used to purchase and hold investment properties throughout the United States based on DST's investment objectives. For example, DST may specialize in single-tenant properties with three networks in the US or multi-family assets in the Southeast. Investors may choose to invest all or part of the proceeds from the sale of the abandoned property in the DST.

DSTs offer real estate investors the following benefits: investment in quality institutional real estate; limited liability; outstanding funding through sponsor DST; Management of debt obligations; passive income; and the opportunity to pay money. Once the DST is sold, investors can continue to defer capital gains through a 1031 exchange.


Many real estate investors are unaware of the various alternative investment solutions available through a 1031 exchange. One that is often overlooked is the investor's ability to sell oil, gas and other rights. The Perch Wealth team can provide the education and resources any investor needs to complete this type of transaction.

Under the Internal Revenue Code (IRC), oil, gas and other rights may be qualified as equal if their share meets the same requirements and is thus defined as real estate. An interest in oil, gas and other rights is considered surrendered or replaced property. As demand for resources continues to grow, an influx of investment opportunities has become available to accredited investors. In addition to giving investors access to an unmanaged investment, oil, gas and other rights can allow them to diversify their portfolio while reducing risk by investing in assets with low historical returns. This is the correlation of traditional stocks, bonds and stocks. Investors can also use these alternative investments to invest the residual income from their 1031 exchange, providing a tax-deferred solution to the common 1031 exchange problem.


Using a 1031 exchange to sell a residential unit comes with strict guidelines, and the Perch Wealth team guides investors through the process – helping them determine if the property qualifies and provides leverage. - see exchange options after the sale of the property.

Only rental properties that meet the Internal Revenue Service (IRS) guidelines for similar properties can be sold and exchanged through a 1031 exchange. The investor's primary residence or vacation rental cannot be exchanged; only property held as an investment and rented for one year is eligible. Any rental income that meets these requirements can be sold with a 1031 exchange. After selling the rental property for income, investors can sell another asset that better suits their investment goals. For example, an investor may be retiring and willing to give up the management responsibilities associated with the property's rental income. In this scenario, the investor can take the rental income from the property and sell it in a similar asset class, such as a Delaware Statutory Trust (DST), which requires zero management responsibilities.

A 1031 Exchange Has Many Benefits


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Securities offered through Emerson Equity LLC, member FINRA / SIPC. This is not an offer to buy or sell securities. Securities investing carries an inherent risk of loss of some or all of the principal invested. We are not tax professionals. You should always discuss your investments with a tax professional prior to investing. Securities are sold only in those states where Emerson Equity LLC is registered. Perch Wealth LLC and Emerson Equity LLC are not affiliated. COMPANY and Emerson Equity LLC do not provide legal or tax advice. Securities offered through Emerson Equity LLC Member FINRA / SIPC and MSRB registered. Emerson Equity LLC is unaffiliated with any entity herein.
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Perch Financial LLC and Emerson Equity LLC do not provide legal or tax advice. Securities offered through Emerson Equity LLC Member FINRA/SIPC and MSRB registered. Emerson Equity LLC is unaffiliated with any entity herein. 1031 Risk Disclosure:


  • There is no guarantee that any strategy will be successful or achieve investment objectives;
  • Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
  • Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
  • Potential for foreclosure – All financed real estate investments have potential for foreclosure; ·Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;
  • Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
  • Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits

No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood, and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward-looking statements are never an assurance of future results.

Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read, and understand all the risks associated with buying private placement securities. Investments are not guaranteed or FDIC insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur.

Risk Disclosure: Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss.

NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by Perch Financial LLC, Emerson Equity LLC, or any affiliate, or partner thereof. Perch Financial LLC does not warrant the accuracy or completeness of the information contained herein.