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| Compass
Investments &
1031 Exchange Who
We Are
Compass Investments & 1031 Exchange are leaders
in identifying replacement property solutions suitable for 1031 Exchanges. While
our offices are located in New England, we maintain professional relationships
down the entire east coast.
What’s In It For You
Whether
you are the exchanger or the trusted advisor, our job is the same. Educate, Analyze
and Recommend.
Our process is to educate our clients about replacement
property solutions. This can remove the headaches of active property management.
Analyze
the exchanger’s current situation and ultimate goals for completing the exchange.
The exchanger may want to defer taxes but still receive income from real estate.
Recommend
suitable replacement properties that meet an exchanger’s risk level, time horizon
and ultimate goals. Why
We’re Different
Our step by step process as well as our property selection
due diligence is what makes us different. While everyone will tell you they’re
process driven and detail oriented, we really mean it.
Each party involved
in the exchange will become part of our process which clearly details and outlines
every step that needs to be accomplished.
Compass Investments & 1031 Exchange
will go through its own critical research driven analysis of each property before
it is ever recommended to a client. We will assess your entire financial picture
and goals before determining if a 1031 exchange into passive real estate management
is right for you. |
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Attention real estate professionals: The NAR has submitted a proposal to the SEC requesting changes to current rules and regulations. This would allow both real estate and securities professionals to be paid when placing clients into a security (like TIC). We are being proactive in developing strategic alliances up and down the east coast. This would create some interesting changes in the 1031/TIC industry. Call us if you’d like to become a future partner or to learn more. |
The A-B-Cs and 1-2-3s of TICs: |
The tenant-in-common (TIC) phenomenon continues to become better recognized here on the east coast. More people are utilizing these offerings as replacement property in their 1031 exchanges. Perhaps you’ve helped a client exchange into a TIC offering, or you’ve explored the idea but have been reluctant due to a lack of exposure to TIC, especially in the northeast. Exciting changes are forecast in the industry as the National Association of Realtors (NAR) has proposed an exemption to the Securities Exchange Commission (SEC) that would allow real estate professionals and registered representatives with securities licenses to share commissions on TIC transactions. I thought we’d take this opportunity to highlight some of the most beneficial strategies of using TIC offerings to complete like-kind exchanges.
The property owner is tired of being a landlord:
It sounds like an old cliché but we know how tiring the “3 T’s” can be when owning investment property – tenants, toilets and trash. With more and more baby boomers retiring, and many relocating to warmer climates, it becomes very liberating to be freed from the burden of 2AM calls for a burst water pipe or an overflowing toilet. This is our most common position. We help property owners who no longer want to be involved in day to day active management. TIC offerings come with professional management already in place. The exchanger no longer needs to be an active landlord but still benefits from owning investment real estate.
Many times they are also able to “exchange up” into a higher quality property. TIC offerings are typically institutional grade properties, many times with a national tenant profile. Diversification is also a huge benefit in this strategy. An exchanger may use the proceeds from their relinquished property and purchase several different TIC offerings as replacement property to complete their like-kind exchange. The exchanger is able to diversify their real estate holdings across different asset classes, geographic areas and tenant profiles.
Use IRS identification rules to your advantage:
Active investors often feel there is no place for TIC in their 1031 exchange. Unfortunately we’ve witnessed some failed exchanges where TIC could have served as a critical back-up plan. Under IRS guidelines, an exchanger has 45 days from the sale date of the relinquished property to identify potential replacement properties. Then they have 180 days (also from sale date) to close on replacement properties. Things out of our control sometimes happen in the real estate world. Closings are delayed, titles are not clear, the seller decides to fetch a higher price or not to sell at all. In today’s tighter lending market, sometimes financing is hard to solidify. By utilizing the IRS identification rules, an active investor could identify a TIC property even if he/she intends to exchange into another property they will actively manage. Then, should something unfortunate happen where they can not close on their desired property within the 180 day timeframe, the TIC property they identified as a “safety net” allows them to complete their exchange and defer paying the tax consequence.
Avoid having leftover boot to pay taxes on:
Often we come across investors who are not quite ready to give up total control of property management but would certainly like a lesser role (and presumably fewer headaches). They are looking to downgrade the size of the property they manage. Other times, investors just find a deal that is too good to pass up. Remember IRS rules for completing a successful exchange call for the replacement property to be of “equal or greater value” and carry “equal or greater debt.” So when someone sells a building for $1.5 million and finds a replacement property that costs $1 million, they’ll have $500,000 in “boot” that they’ll have to pay taxes on. They could identify a TIC offering to exchange that remaining amount into and again defer the tax consequence.
These are some of the more common scenarios where TIC can be advantageous to investors seeking replacement property to complete a like-kind exchange.
An Alternative for Higher Exchange Values
Some investors with higher valued properties may also desire to escape active property management but don’t want to be involved in a property co-owned with other investors. We have programs available for higher exchange values that allow an investor to maintain sole ownership of the replacement property. These programs offer passive management, institutional grade properties and national tenant profile as well.
Using tax-deferred exchanges is a wonderful wealth building tool. Be careful to follow all IRS rules so that your exchange is completed successfully. |
A
qualified intermediary plays a crucial role in completing a 1031 exchange. Call
us for a referral to a qualified intermediary in your area. 877.298.1031. |
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We
understand tax deferral is top priority for most of our clients. Being able to
invest 100% of your proceeds from selling real estate is a huge advantage to your
overall wealth plan and future goals. We evaluate your 1031 exchange as part of
your overall financial picture, not just as a snapshot of the particular property
being relinquished. Our step by step process is very detail oriented to guide
you smoothly through the sometimes confusing rules of the 1031 exchange.
After
taking full advantage of deferral of capital gains taxes and depreciation recapture,
our
clients realize how liberating it is to be free from day to day hassles of property
management. We specialize in locating suitable replacement property that will
qualify for your 1031 exchange, defer your taxes and put you into a passive, rather
than active management role…all while still enjoying the benefits of owning real
estate.
Alternative replacement property offerings typically involve higher
end, institutional grade property. Our offerings are geared toward the middle
range real estate investor that normally may be blocked out of owning institutional
grade real estate individually. These programs include but are not limited to
tenant-in-common (TICs), NNN Leases, 721 Upreits, Delaware Statutory Trusts (DSTs)
and oil and gas programs.
Our management team is always available for
you to speak to directly. Todd Thibodeau is Founder & Managing Partner. Lee Copson
is Vice President of Investments. Both Todd and Lee are involved from beginning
to end in each transaction. We want to work as a team with both professionals
and clients. We welcome conference call situations with professionals and their
clients who may be interested in the 1031 exchange.
We work with accountants,
attorneys, real estate professionals, qualified intermediaries, and finally, the
client selling the property. Multi layered due diligence is performed on every
property we present to our clients. We evaluate the property, the real estate
market it is in and the tenants and leases in place for the property.
We
travel up and down the east coast giving NBI and Lorman CPE based seminars on
the topic of the 1031 exchange and replacement property solutions. We also offer “webinars” where you may log on from your computer and enjoy one of our educational
presentations. Please call our toll free number for
more information about signing up for one of our webinars.
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| Toll
Free: 877.298.1031
Compass Investments & 1031 Exchange
West Springfield, MA 01809
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