1031 Rentals, Apartments, Condos, Homes, Multi-Family

1031 Rentals, Apartments, Condos, Homes, Multi-Family

Rental houses and condos (one or more) can be used as replacement properties in 1031 Exchanges, as well as multi-family apartment properties. We have seen as many as ten replacement rental houses and condos used in one 1031 Exchange (in the particular case, where the exchanger sold a mobile home park and wanted to reinvest in a diversified portfolio of single family rentals). In fact, many 1031 Exchanges involve these kinds of properties as relinquished properties. Normally such properties are found for exchangers on a local basis in the area where you live. Realtors normally assist exchangers to find such properties in local markets. We do not compete with Realtors for such properties, but possibly could refer you to a Realtor to assist you if you wish to pursue these kinds of replacement properties.

For larger exchanges where an apartment project is a choice as a replacement, we may be able to refer you to a national or regional real estate brokerage company to assist with your search. In such event, 1031Replace.Com may receive a broker commission or referral fee from the company, but such properties usually require several millions of dollars of equity to buy.

Another attraction of this category of replacement property (as well as apartment property TIC's) is faster depreciation schedules (thereby sheltering more of the cash flow) than office buildings, industrial/warehouse, retail (shopping centers, etc.) and other non-residential properties. The depreciation schedule for residential is currently 27.5 years while the depreciation schedule for other types of properties is 39 years. So, residential properties offer a depreciation deduction advantage over other kinds of properties of approximately 30%.