Q. When I sell my investment real estate, how can I defer capital gains tax?

A. The Internal Revenue Service provides for capital gains tax deferment on a real estate sale through Section 1031 of the Tax Code. Under this provision, investors may exchange their property in essence reinvesting and maintaining debt for a like-kind property. Timeframes for a 1031 exchange are very specific, so investors should consult with experts before proceeding with a 1031 exchange.

Q. Is it possible for the individual investor to access institutional-quality real estate?

A. An investment option called tenant-in-common does allow for individual investors to own institutional-quality real estate. Through this investment, the real estate is jointly owned by a group of accredited investors. Through an offering provided by a tenant-in-common sponsor, these investors are able to reap the benefits of quality real estate and abandon the inherent dangers of a wildly speculative market.

Q. Is there a method by which one can own real estate, but not be immersed in its daily operations?

A. For some investors, a real estate management firm solves this dilemma. For others, however, tenant-in-common investments provide not only relief from management duties, but also access to real estate that would otherwise be unattainable.

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