A possible way to get off the investment property dance floor with all your marbles would be through some new vehicles such a trust set up through a qualified intermediary, such as ipx1031. These plans involve a reputable receiver (such as Allstate Insurance) who receives the bulk of proceeds from your exchange, then pays you a schedule of payments over time. Receiving the proceeds in this way eliminates the lump sum payment which would trigger a large capital gains payment. You still would be liable for capital gains tax, but at a much lesser rate, since the payments are smaller. The cautions of this program are to check with your tax advisor as to the current position of the IRS on this scheme. Just as important is to make sure the entity that receives the proceeds is reputable and likely to remain solvent so that you can receive all your payments. Check with Ron Ricard, CES, AVP, Regional Sales Manager
Some REITs could also work in the 1031 deferral. TICs are another method, but you have less control. And how do you sell your position in a TIC? Do you have to find a buyer? You may want to pay a little gain, and trade down for a property you own with NO partners. After all, there are some great buys out there right now.
You can always sell and invest in a TIC (Tenancy in Common). This can be accomplished via a 1031 exchange also. You will avoid paying capital gains taxes and still place your money in an income producing investment. If you're interested in more information about this solution, give me a call and we can chat. Coincidentally, I have a seminar coming up soon on just this subject. Let me know if you are interested in knowing more.
Ed Bangle (408) 218-5795