Kay Properties and Investments Helps Clients Complete a $4.4M 1031 Exchange

Kay Properties is proud to announce the successful completion of a 1031 exchange, in which DSTs were used in conjunction with non-DST real estate.  The clients, two brothers who own and operate farmland in the Midwest, combined the purchase of farm properties with DST real estate to “replace” the necessary real estate value in their exchange to be able to take advantage of a full tax deferral. They utilized the Kay Properties 1031 DST marketplace at www.kpi1031.com to successfully complete a tax deferred 1031 exchange into multiple DST 1031 investment offerings.  

The Delaware Statutory Trust exchange investments were completed by Kay Properties and Investments’ team members Betty Friant, Senior Vice President, and Matt McFarland, Associate. 

Before making any big investment decisions, read up on the basics of 1031 Exchanges.

Betty Friant, Senior Vice President, stated, “We are thrilled to be able to work alongside our clients through a more complicated 1031 exchange process.  Though many of our clients use DSTs as their primary and sole strategy in a 1031 exchange, from time-to-time, there are individuals who purchase a combination of real estate they intend to self-manage along with DSTs.  In cases such as this, we lean on our deep experience with the 1031 exchange process, rules, and requirements to potentially help ensure that our clients are able to accomplish what they set out to do.  DSTs usually possess a greater ease and certainty of close compared to the purchase of “hands-on real estate” so it’s important for us to come up with unique and creative strategies that work best for the client with respect to the entire transaction.” 

Friant continued, “In many cases, non-DST real estate may fall out of escrow and potentially expose the client to adverse tax consequences.  To potentially avoid this scenario, we may work with the client to identify a number of DST properties as a back-up strategy.  If the non-DST real estate were to fall out, and the DSTs they identified were still available, the clients would have the ability to exchange into the DSTs they identified instead of facing a failed or partially failed exchange.  To create a scenario such as this requires in-depth knowledge of the DST marketplace as well as access to an array of DST offerings from over 25 different DST sponsor companies, which we are grateful to possess on the Kay Properties platform at www.kpi1031.com.”

Matt McFarland, Associate at Kay Properties, stated, “In this particular case, the two brothers needed to replace a large amount of debt replacement in their exchange to equal or exceed their sales price from the relinquished property.  To achieve this, the clients were able to utilize a DST that comes with a very high loan-to-value, along with other DST offerings with pre-arranged non-recourse financing.  Their three DST investment purchases combined with the farmland properties enabled them to qualify for a complete 1031 exchange tax deferral.”

McFarland continued, “The flexible nature of DSTs allow them to be utilized in a myriad of 1031 exchange situations.  We are grateful to partner with clients who use DSTs in different ways to accomplish what is best for themselves and their families.”