Financial advisors are increasingly working with clients who want to exit appreciated investment real estate—but determining the most appropriate tax-deferral strategy requires a clear understanding of multiple complex options. Join Cantor Fitzgerald's John Bacigalupi for a practical comparison of IRC §721 UPREIT transactions, Delaware Statutory Trusts (DSTs), and Qualified Opportunity Zones, with a focus on how each strategy can be used to defer taxes and transition clients into more passive investment structures.
Participants will learn how 721 UPREIT structures allow clients to contribute real estate in exchange for operating partnership (OP) units, deferring capital gains, depreciation recapture, and net investment income taxes. The session will also explore how these strategies compare to traditional DST investments and Opportunity Zone planning, highlighting key differences in structure, liquidity, control, and long-term planning implications.
In addition, the program will emphasize the questions advisors should be asking clients to determine suitability, including considerations around time horizon, income needs, liquidity preferences, and estate planning goals.
The advantages and trade-offs of 721 UPREIT transactions will be examined, including tax deferral benefits, passive income potential, diversification opportunities, and estate planning advantages, as well as limitations such as loss of future 1031 exchange eligibility, reduced control, liquidity constraints, and potential tax consequences upon conversion of OP units.
Learning Objectives
- Compare 721 UPREIT transactions, DSTs, and Opportunity Zones as tax-deferral strategies for exiting investment real estate
- Identify key client suitability factors, including income needs, liquidity preferences, and long-term planning goals
- Understand the structure, tax treatment, and operational mechanics of 721 exchanges and OP units
- Evaluate the advantages and limitations of 721 UPREIT strategies relative to alternative approaches