How to Invest in Real Estate

Investors in Columbus, OH generally have several paths into real estate, ranging from direct ownership of a rental home or small commercial building to passive structures that require less day to day management. Direct ownership generally provides full control over the property and its income, but also requires the owner to handle leasing, maintenance, and tenant relationships, either personally or through a property manager. For investors who already own appreciated real estate and want to move into a different property type or a more passive structure without an immediate tax bill, a like kind exchange under Section 1031 can defer capital gains and depreciation recapture as long as the proceeds are reinvested in like kind real property held for investment purposes.

Passive structures such as a Delaware Statutory Trust, generally referred to as a DST, and certain tenancy in common arrangements, generally referred to as a TIC, can qualify as like kind replacement property for a one thousand thirty one exchange because the investor holds a direct or beneficial interest in real property rather than an equity interest in an operating entity. This differs from typical real estate syndications or crowdfunding platforms, which generally structure investor participation as an equity or membership interest in a limited liability company or partnership rather than direct real property ownership, and generally do not qualify as like kind replacement property under current law. A Delaware Statutory Trust or tenancy in common interest may itself be a security, so Columbus, OH investors considering these structures generally work with a licensed securities professional in addition to a Qualified Intermediary and tax advisor.