UPREIT: Umbrella Real Estate Investment Trust

Is this the right investment for you?

Jigsaw puzzle showing real estate actions.

Converting real property in to a REIT is possible using an UPREIT. The potential advantages of using an Umbrella Partnership Real Estate Investment Trust (UPREIT) in conjunction with a Section 1031 Exchange in bullet points:

Deferred Capital Gains Taxes: A primary advantage of using an UPREIT in a 1031 Exchange is the ability to defer capital gains taxes from the sale of a property. By transferring the property into the UPREIT, an investor can avoid immediate capital gains tax that would be due in a traditional sale. The tax is deferred until the investor sells their Operating Partnership (OP) units or the UPREIT sells the property.

  • Liquidity: Unlike direct ownership in real estate, UPREIT Operating Partnership units can be more readily converted to cash. Although the conversion of these units into REIT shares may trigger a tax event, the investor has the freedom to decide when to make this conversion and potentially spread the tax liability over a longer period.
  • Diversification: By participating in an UPREIT, an investor can diversify their real estate portfolio. UPREITs typically own a variety of properties in different sectors and geographic locations, reducing the risk associated with owning a single property.
  • Professional Management: UPREITs are managed by professionals who handle day-to-day operations and decision-making. This allows investors to enjoy the benefits of real estate investment without having to deal with the complexities of property management.
    Estate Planning Benefits: If held until death, the beneficiaries of the investor’s estate will receive a step-up in basis on the OP units, potentially reducing the capital gains tax liability.
  • Access to Larger Investments: Through an UPREIT, small investors can gain access to larger, institutional-grade properties that would be out of reach for them individually.

However, it’s important to note that UPREITs also come with risks and complexities, and may not be suitable for all investors. It’s recommended to consult with a tax advisor or real estate investment professional before making any decisions.

Are you interested in learning more about how to maximize the benefits of a Section 1031 Exchange with the use of an Umbrella Partnership Real Estate Investment Trust (UPREIT)? As a lead generation expert, I can provide you with valuable information and guidance on how to take advantage of this powerful tool for your real estate investments.

Whether you’re looking to defer capital gains taxes, diversify your portfolio or gain access to larger investments, I can help you navigate the complexities of UPREITs and ensure that you make informed decisions that align with your investment goals.

Don’t miss out on the potential advantages of UPREITs. Call or email me today to learn more and get started on your real estate investment journey.

Photo of Harlan Mayer, Principal Broker

Harlan Mayer, Principal Broker

With over 20 years experience, Harlan has a passion for helping clients complete successful exchanges and grow their wealth!

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