What is a 1031 Exchange? Understanding a Powerful Tax-Deferral Strategy
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5 min
ORIGIN EXCHANGE
1031 Tax Deferral Plus Passive Income
Exchange up into institutional-quality DST assets and exchange out of active management.
How It Works
Through our platform, investors can exchange their properties for professionally managed, institutional-quality DST assets, receiving monthly distributions and the potential for capital appreciation.
STEP 1
1031 Exchange
Sell your investment property and complete a 1031 exchange into a Delaware Statutory Trust (DST). Receive fractional ownership interests and monthly distributions from the DST.
STEP 2
721 Exchange
DST interests may be acquired by the Origin IncomePlus Fund, for units in its subsidiary operating partnership (OP), in a tax-deferred exchange under Section 721.*
*There is no guarantee that the IncomePlus Fund will exercise its fair market value option.
Program Benefits
Defer Your Taxes Indefinitely
Taxes including federal capital gains, state income and depreciation recapture are deferred and the basis from the original property rolled over.
Generate Passive Income
Landlords exchange day-to-day property management for the benefits of a passive, monthly income stream.
Access Institutional-Quality DST Assets
Investors can exchange privately held properties for interest in Class A multifamily assets sourced and managed by our team of experts.
Simplify Your Estate Planning
Beneficiaries inherit interest in a security, rather than a property, through an estate or trust—with little or minimal tax implications if they decide to liquidate the real estate.
Calculate Your Tax Savings
See how much you could save through a 1031 exchange versus paying taxes on your property sale.
This 1031 Exchange Calculator is intended for informational purposes only and should not be considered tax advice. We do not offer tax-related suggestions or guidance. We recommend consulting with a qualified tax professional for personalized advice and to understand the specific implications related to your individual tax situation. The results provided by this calculator are estimates and should be used as a guide only.
Get access to institutional-quality DST assets without high fees.
Syndicated DSTs through brokers can have upfront fee structures as high as 14%. Origin Exchange’s fee structure is simple: We charge an acquisition fee and a fee for organizational and offering expenses. And we don’t pay any brokerage sales commissions, which means more of an investor’s capital is going into the purchase of real estate.
| Upfront Fees | ORIGIN EXCHANGE | DST Market Range |
| Acquisition Fee | 1.0%-1.5% | 0.0%-4.0% |
| O&O Expenses | 0.5%-1.0% | 0.5%-2.0% |
| Selling Commissions |  | 5.0%-6.0% |
| Managing Broker Dealer Fee | | 1.0%-1.5% |
| Dealer Manager Fee | | 1.0%-1.5% |
| Finance Coordination Fee | | 0.0%-1.0% |
The information presented is a description of future Origin Exchange DST offerings and are subject to change without notice, may not come to pass and do not purport to be complete.
Three Reasons to Invest with Origin Exchange
Low-Fee DST
We charge a low fee to participate. No sales commissions. No dealer manager fee. No broker fee.
Quality Real Estate
We focus exclusively on Class-A private multifamily real estate which has consistently generated higher returns with a lower level of risk than other property types.1
IncomePlus Fund Option
Origin’s IncomePlus Fund invests in core, core-plus and value-add properties, making it flexible in changing economic situations.
Get the Overview
WHAT’S INCLUDED:
1031 Exchange Requirements
721 Exchange Overview
Origin Exchange Benefits
Frequently Asked Questions
What are the fees for Origin Exchange?
Origin only charges an acquisitions fee of 1.5% to 2.5%. There are no ongoing management fees. However, Origin is entitled to be reimbursed for the DST organizational and offering expenses.
Can I invest in the DST through a business entity (i.e., a trust, limited liability corporation, partnership or corporation)?
The entity that is selling the asset to be exchanged in a 1031 exchange transaction must be the entity that acquires the DST interest. For instance, if a business partnership owns the investment, the partnership must make the DST investment.
How much yield can I expect during the DST hold period?
Cash flow during the DST period is a function of many variables, including cap rate, financing costs and property-level expenses. While cash flow can vary depending on market and property attributes, we anticipate the DST will generate an average of 4.25% to 5% cash flow during the holding period.
What tax forms will I receive, and when can I expect them?
DST investors will receive a “substitute 1099” from the DST trustee, which will provide the investor with taxable income details. If the DST interests are exchanged for units in the operating partnership, the investor will receive a K-1, which reports the investor’s income share and provides comprehensive information about the investor’s deductions and other tax-related items about the partnership.
What happens to my DST interests if the IncomePlus Fund does not execute its fair market value option?
If the IncomePlus Fund does not execute its fair market value option to acquire the DST, the expectation is that the asset will continue to be held by DST investors until it is sold. At that time, the investor could elect to complete another 1031 exchange or take cash and pay taxes on the investment.
Learn More About 1031 and 721 exchanges
- The data’s source is the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index and represents the average annualized return over each five-year period from 1/1/1990 to 12/31/2023. Returns are unlevered.
