Mar 06, 2024

Section 1031: Tax-free Real Estate Exchanges - What You’re Not Thinking About When You’re Thinking About Selling Your Farm

Louis Rogers, CEO of Capital Square, and his horse Tipperary Liadhnan Paddy out on cross-country. Photo courtesy of Capital Square

When you’re ready to downsize or sell your farm, countless variables are likely on your mind. Are you selling your horses or finding a new barn for them? Are you shifting your lifestyle or just your owned acreage? How do you ensure you’re not forgetting any crucial details?

Deferring or potentially even forgiving capital gains tax may not have crossed your mind, but tax-advantaged real estate investments present powerful opportunities to do exactly that. You’re familiar with the idea of building wealth through real estate, for yourself and for future generations. However, like a beautiful thoroughbred, real estate is far more than a one-trick pony.

Investing in real estate has countless advantages: stable cash flow, appreciation, depreciation deductions to shelter cash flow from tax and a hedge against inflation, just to name a few. Yet it’s Section 1031 of the tax code, legislation over 100 years old, that provides exceptional tax benefits not available for other investments. Are you aware that investment and business property can be sold, with the capital gains tax deferred (or even forgiven), if the seller takes advantages of Section 1031 of the tax code?

We’re not suggesting that you sell your farm to become a landlord and worry about tenants, toilets, and trash. On the contrary, Capital Square manages passive real estate investments that empower investors to access quality properties they would not be able to afford on their own through a largely automated, simplified Section 1031 exchange process.

Competing on an 1,100-pound animal with a mind of its own is incredibly challenging. And running a horse farm day in and out takes skill and hard work. But investing in tax-advantaged real estate opportunities can be simple and straightforward, provided you are working with the right manager.

Unlike an individual owner’s active management of rental property, fractionalized ownership of real estate through a Delaware statutory trust (DST), via a 1031 exchange, has numerous advantages. For example, the DST manager—not the investor—sources and manages the property on a turn-key basis. In addition to passive income and appreciation, DST investors defer capital gains taxes, and this tax deferral becomes full forgiveness if passed on to the next generation at the end of one’s life. Cash flow is paid to owners monthly by ACH directly into their bank accounts, with quarterly reporting and an annual audit.

Furthermore, by investing in multifamily real estate, an investor is focusing on the most stable, recession-resistant, inflation hedging asset type, as well as an asset type likely to see long-term rent growth and appreciation. Housing is essential, a necessity. Moreover, higher housing prices and mortgage rates have pushed even more people toward the rental market, which has increased demand in recent years and is expected to remain in-demand for years to come. Multifamily real estate is a long-term investment strategy with historical strength and legacy-building potential.

At Capital Square, we love talking about tax law, and we love talking about real estate. If neither of these subjects are something you discuss around the stable, that’s OK. We all have our specialties. This just happens to be ours.

Plus, we both share this understanding: a love of horses and the sport of eventing can change lives. You know it when you’re riding your favorite Irish Sport Horse on a warm spring morning, and you know it when you hear the sound of hooves echoing throughout the arena.

Thoughtful tax strategies when you’re selling your farm or investment property can change lives as well. Yours, as well as your family’s.

At Capital Square, we too are equestrians, and we are here to make taxes less taxing. We are just a call, email or text away. See you at the next competition.

May 25, 2024 Eventing News

Caitlin Silliman: The Roller Coaster World of Eventing

As both an eventer and business owner, Caitlin Silliman is well aware of the need for a solid team behind her. Not only has she had supportive family and friends cheering her on, she has ridden and worked under top-notch professionals such as Susie Beale and Silva and Boyd Martin, and now runs her business side by side with her good friend and fellow eventer Erin Kanara at Erin’s farm in Pennsylvania, the state Caitlin has always called home.

May 24, 2024 AEC

Three Months Until the Start of the 20th Anniversary USEA American Eventing Championships

The 2024 United States Eventing Association (USEA) American Eventing Championships (AEC) presented by Nutrena Feeds is just over three months away, which means it is time to start planning your trip to Lexington, Kentucky! For the second year in a row, the AEC, which is brought to you by the USEA and its organizing partners at Equestrian Events, Inc and Mary Fike, will return to the iconic Kentucky Horse Park from Aug. 27 to Sept. 1.

May 24, 2024 News

Athletux Signs on as Bronze Sponsor for 2024 USEA American Eventing Championships

The United States Eventing Association, Inc. (USEA) is pleased to announce Athletux as a “Bronze Level Sponsor for the 2024 USEA American Eventing Championships (AEC)” taking place at the Kentucky Horse Park in Lexington, Kentucky, Aug. 27- Sept. 1. Athletux will also be the “Official Commentary Provider” at the AEC, offering commentary for the upper levels at the event. All levels of the AEC will be live streamed.

May 23, 2024 Eventing News

Weekend Quick Links: May 25-26

Are you following along with the action from home this weekend? Or maybe you're competing at an event and need information fast. Either way, we’ve got you covered! Check out the USEA’s Weekend Quick Links for links to information including the prize list, ride times, live scores, and more for all the events running this weekend.

Official Corporate Sponsors of the USEA

Official Joint Therapy Treatment of the USEA

Official Feed of the USEA

Official Saddle of the USEA

Official Equine Insurance of the USEA

Official Forage of the USEA

Official Supplement Feeding System of the USEA

Official Competition & Training Apparel of the USEA

Official Horse Boot of the USEA