721 Exchange - defer capital gains tax

mobile home university
1

Has anyone done a 721 Exchange?

“A 721 exchange is similar to the 1031 exchange. IRC Section 721 allows investors to exchange appreciated real estate property held for business or investment purposes for units in an operating partnership that will be converted into shares of the real estate investment trust (REIT).”

We want to do a 721 Exchange with our mobile home park in order to defer capital gains tax.

We have confirmed with Sunrise Capital Investors that they do 721 exchanges with mobile home parks.

Do you know of other Investment Funds/REITs that offer 721 exchange?

If you have done a 721 exchange, please share your experience, pros and cons.

Thank you!

2

I think this is more usually thought of as a form or buyout or merger. You give up your equity in your parks and get equity in the acquirer. You’re not usually going to be able to “look for” this, it’s a strategy after you’ve made a deal to be acquired.

That’s my understanding anyway.

3

Have not done this but have also recently looked into it. One of the challenges will be having the fund identify a target property for you within your 45 day window of closing your MHP. The other item to consider is that once you do this, you cannot 1031 out of the fund. Once the fund concludes, you will have to pay your tax at that time.