NYDEC - New York Deferred Exchange Corporation
NYDEC - New York Deferred Exchange Corporation
Lower Manhattan
Blog

Replacement Property Alternatives

“Replacement Property” options exist for exchangers looking for alternatives to traditional real estate.  The two most common are referred to as Delaware Statutory Trusts (“DST”), and direct-deeded mineral rights (“mineral rights”).

DSTs permit exchangers to purchase a small portion of a large real estate purchase.  These products are developed by real estate management professionals that generally provide a fixed rate of return over a specified period of time (typically 5 – 7 years).  At the conclusion of this hold period, a “liquidity event” occurs whereby the owner can reinvest the proceeds into another investment or business property through another tax-deferred exchange.  These investment opportunities are popular for several reasons:
1)  Frees property owners from the responsibilities of active management
2)  Simplicity of receiving predictable automatic monthly distributions
3)  Often includes built-in debt options to resolve taxable “mortgage boot” exposure
4)  Allows investment in diverse regions, property types and sizes

Mineral Rights are another popular option.  These rights can provide excellent diversification from both a geographic and real estate class perspective.  Exchangers purchase a small percentage of thousands of operating wells throughout the U.S.  They typically harvest a mix of oil, natural gas, and natural gas liquids.  Owners benefit through royalty payments derived from the sale of these resources.  Large energy companies that lease the property are responsible for the harvesting and distribution of the minerals.  The owners, in return, are paid approximately 20% of the gross revenue derived by the sales.  These investment opportunities are popular for several reasons:
1)  Frees property owners from the responsibilities of active management
2)  Allows exchangers to diversify their portfolios with a direct investment in oil and gas
3)  Receives preferred tax treatment on generated revenue
4)  Simplicity of receiving automatic monthly distributions

In either case, it is important to thoroughly review these or any other investment with your financial advisor before investing.


Radio Interview with Robert Howe, Esq.

Click here for interview


Welcome to our new Website

NYDEC is pleased to provide this blog resource as a way of delving into specific issues relating to current events within the Like-Kind Property Exchange field.  We appreciate your thoughts and feedback via email.






Copyright 2014, New York Deferred Exchange Corporation, All Rights Reserved.