Strategies
Four paths a large gain can take.
Three start with appreciated property. Opportunity Zone 2.0 may apply to an eligible capital gain from sources other than real estate, which can make it the widest of the four. Your advisor doesn’t need to run these, only recognize which one may be on the table.
1031 · DST · 721 · OZ 2.0
1031
Exchange
Sell an appreciated property and roll the proceeds into replacement real estate. Gain recognition may be deferred if the timeline, identification rules and other applicable requirements are met. Tax results depend on the taxpayer and the transaction.
May fit the client who wants to stay in real estate but is done with the property they have. Whether an exchange is available or appropriate is a facts-and-circumstances question for the client’s own tax counsel.
What the advisor says
“Before you sell, let’s look at whether an exchange keeps that gain working for you.”
DST
Delaware Statutory Trust
A fractional interest in institutionally managed property. DST interests are illiquid. A DST interest may support a Section 1031 exchange only when the structure and transaction satisfy the applicable requirements.
May fit the client who wants continued real-estate exposure without another building to run. Suitability, qualification and tax results are not determined here.
What the advisor says
“If the goal is out of management but still in real estate, there’s a structure for that.”
721
UPREIT contribution
Contribute property into a REIT’s operating partnership for OP units. A 721 transaction is not guaranteed. Depending on the structure and governing documents, it may provide a path from a concentrated property into a broader portfolio and may create future redemption options.
Redemption rights vary. Lockups and restrictions may apply. The sponsor or operating partnership may control important decisions. Heirs may or may not be able to divide the interest, depending on the documents.
What the advisor says
“Depending on the structure, this can be a way to move from one building into a broader portfolio. The documents decide what happens next.”
OZ 2.0
Opportunity Zone
Reinvest eligible capital gains into a qualified opportunity fund. Benefits depend on eligibility, timing, holding period and compliance with applicable rules. The gain does not have to come from real estate, but not every gain qualifies.
Can widen the conversation past property when the gain, the fund and the timeline fit. A concentrated stock position, a business sale or other capital gains may be relevant. Tax results depend on the taxpayer and the transaction.
What the advisor says
“Whatever the gain came from, there may be a way to treat it differently — if it is eligible and the rules are met.”
Why it matters to the advisor
A sale is a moment to provide a solution.
When a client is ready to sell, the broker, CPA, and QI are already in the conversation. The advisor who saw it coming is the one who can offer a path.
A chance to keep the relationship whole
Proceeds from a sale are often the largest inflow a client will have. Recognizing it early is how it can enter the plan. Whether assets remain at the firm is not promised.
The whole balance sheet
Advising on a portfolio while ignoring the client’s biggest holding is a plan with a hole in it. Clients notice.
A reason to be referred
Property owners talk to other property owners, and to the CPAs and attorneys who serve them. Being the advisor who can hold this conversation is a referral source.
All four sit under one system.
The Real-Estate Wealth Advisor Enablement System is the umbrella. Recognition, conversation, client-ready material, and specialist backup work the same way whichever route the client takes, so your team learns one process instead of four products.