Finding a Qualified Intermediary for your 1031 Exchange by Christopher Sanz, JD, LLM

Qualified intermediaries (QIs) are vital to the success of tax-deferred 1031 exchanges of real property. It is the QI’s responsibility to facilitate the exchange and ensure investors meet all the rules and timelines required for preferential tax treatment. This includes the requirement to identify like-kind replacement property within 45 days following a property sale and to close on the purchase of that replacement property within 180 days of the original sale. The QI receives and holds the net proceeds from the relinquished property and invests it into a new property without triggering any tax implications to the investor/taxpayer.

While their roles are critical to 1031 exchanges, QIs are not regulated by any federal agency nor are they required to by licensed or insured. Therefore, investors must tread careful when selecting a QI. Working with professional real estate advisors can help to ensure the QI you select has the experience and qualification to properly execute all phases on the exchange and make the process as smooth as possible.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

The Good and Bad of Ground Leases by Kevin Sanz, CCIM, MSIRE

NNN ground leases are long-term agreements between landowners/investors and tenants/leases who lease the land on which their buildings sit or on which they plan to erect a building. For landowners, these arrangements provide a reliable stream of rental income as well as the benefit of long-term property appreciation without the headaches and expenses that come with managing the property. Moreover, in the event a tenant defaults on a lease, the building ownership transfers to the landowner who may then profit from leasing both the land and building to another tenant at a higher rental rate in the future.

One of the main disadvantages of ground leases is that land does not depreciate. Therefore, owners/investors may not claim depreciation deductions to reduce their annual income tax liabilities. Working with experienced real estate investment advisors can help to minimize any downside risk to ground leases.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Real Estate Investors Breathe a Sigh of Relief by Christopher Sanz, JD, LLM

Absent from the latest draft of tax legislation making its way through Congress is any mention of Section 1031 exchanges, which for decades have allowed passive investors to defer taxes on the sale of commercial property when proceeds are reinvested in a similar, like-kind property. Previously, the president had called to eliminate the tax break on gains exceeding $500,000 for individual taxpayers or $1 million for married couples filing joint tax returns. While it appears that 1031 exchanges are safe for now, investors should still pursue exchanges in the works and consider expediting them before prosed tax increases and reductions to the estate tax take effect as early as 2022.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Why Drugstores Should be Part of your Real Estate Portfolio by Kevin Sanz, CCIM, MSIRE

Drugstores, such as Walgreens and CVS, are among the few businesses that survived the pandemic largely unscathed and, in many cases, with stronger-than-expected sales. In fact, their proven track record through economic downturns is just one reason why they are sought-after tenants by net lease investors.

Even before 2020, drugstores were in growth mode due to consumers’ focus on health and wellbeing. During the pandemic, their easily accessible locations, often as free-standing corner units with ample parking and drive-through services, provided consumers with convenient shopping options. At the same time, investors benefited from drugstores’ strong credit history and the essential nature of their business. However, as with all forms of commercial real estate, investors must conduct through due diligence and work with professional advisors to understand a specific property’s fundamentals and its potential to yield desired risk-adjusted returns.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.