721 Exchange vs 1031 Exchange: Which One Fits You? (5 Differences)

A 1031 exchange defers capital gains tax when you swap one investment property for another like-kind property, and it can be repeated. A 721 exchange generally defers gain when you contribute property to a REIT's operating partnership in exchange for OP units, which are not REIT shares; exceptions can apply. It ends future 1031 eligibility for that equity. The two can be used in sequence rather than as alternatives: one or more 1031 exchanges, then a possible 721 contribution where the offering provides for it. Stephen Haskell, Partner at Anchor1031, walks through the five differences that matter (repeatability, control, liquidity, timelines, cost structure), a simplified hypothetical illustration of a $2 million property with $1 million of built-in gain under five exits, and who each path may fit. Chapters 0:00 What is the difference between a 721 exchange and a 1031 exchange? 1:06 Is a 721 exchange an alternative to a 1031 exchange? 2:23 What are the five biggest differences between a 721 and a 1031 exchange? 4:53 What happens to a $2M property with $1M of gain under a 1031 vs a 721 exchange? 6:44 When is a 1031 exchange the better choice than a 721 exchange? 7:56 When is a 721 exchange the better choice? 9:00 Can you do both a 1031 exchange and a 721 exchange? Read the full written comparison (with the 12-row table and the worked example): https://anchor1031.com/resources/educ... The complete 721 Exchange Strategy guide (hub for this series): https://anchor1031.com/resources/educ... Watch the full series:    • 721 Exchange Explained   See which current offerings carry a 721 Optional election: https://anchor1031.com/marketplace Schedule a 721 strategy consultation: https://schedule.anchor1031.com/consu... Statutes referenced: IRC §1031, §721, §1014; Treasury Regulation 1.1031(k)-1. Sources for the BREIT and SREIT mention: Blackstone Real Estate Income Trust, Notice to Stockholders, March 1, 2024: https://www.breit.com/wp-content/uplo... Starwood Real Estate Income Trust, letter to stockholders, May 23, 2024, SEC EDGAR: https://www.sec.gov/Archives/edgar/da... This video is for educational purposes only and does not constitute tax, legal, or investment advice. The $2 million example is a simplified hypothetical illustration at an approximate combined 32% rate (federal long-term capital gains, depreciation recapture, the 3.8% net investment income tax and state income tax). It excludes transaction costs, DST and REIT fees and state-specific rules, assumes the gain is fully taxable in the year of sale, and is not a projection of any specific tax outcome. Fee ranges vary by sponsor and are disclosed in each offering's private placement memorandum. Risks include loss of principal, distributions that are not guaranteed, fees, illiquidity and redemption restrictions, and the possibility that a 721 transaction never occurs. DST interests and OP units are illiquid private placements. REIT redemption programs can be limited or suspended by the sponsor. There can be no promise or guarantee at the time of DST purchase that a 721 transaction will occur. Step-up in basis is described under current law. Consult your CPA and estate attorney before acting on any strategy described here. Private placement securities, including DST interests, are offered through Quincy Wells Capital, LLC, member FINRA/SIPC. Anchor1031, LLC is not affiliated with Quincy Wells Capital, LLC. Stephen Haskell, CRD 6864948. Verify at https://brokercheck.finra.org.