Law360 quoted Manatt’s Michael Polentz, co-chair of the firm’s real estate practice, for an article about California real estate firms’ struggle to find properties that will allow them to apply 1031 like-kind exchanges, which are used to pass capital gains tax obligations to new properties.
As reported by Law360, investors have been eyeing tenant-in-common and Delaware statutory trust structures as alternatives to 1031 like-kind exchanges.
Polentz told the publication that lenders particularly like the structure of Delaware statutory trusts as compared with TICs, since in the former case, they only have to deal with one borrower. "However, DSTs ... are very complicated from a tax perspective and must strictly follow the tax guidelines and procedures.”
Read the article here.