Partners can conduct a 1031 exchange, however there are restrictions. Partners cannot utilize their interests in a property to conduct a 1031 exchange individually. This can only be done, with all investors simultaneously utilizing the asset to exchange for a like-kind investment. Individuals can cash out prior to the exchange, however there will be some complex tax issues that will occur and need to be addressed. If one or more of the partners wants to cash-out and the remaining partners want to make an exchange, the remaining partners need to utilize the property as a rental for 24 months prior to making a like-kind exchange.

A 721 exchange allows investors the opportunity to avoid taxes and keep their fortune working for them by collaborating with an Estate Planner, creating a REIT. The 721 exchange can be utilized as an estate planning tool to prepare an investor’s real estate capital to be handed down to heirs.