Tax-Deferred 1031
& 721 Exchange Solutions

Help your clients defer taxes, achieve stable monthly income, protect and grow capital, and optimize estate planning benefits with investment real estate.

Real Estate Wealth Management Resources

Share of Wealth by Generation

Over $23 trillion of real estate is held by investors in or near retirement who need to solve tax burdens as they transition to passive income-producing real estate.

Source: Federal Reserve, Cerulli Associates.|Chart: Visual Capitalist. As of 8/17/23.

The step-by-step guide below will help your clients defer 100% of their capital gains and depreciation recapture taxes by utilizing institutionally managed commercial real estate designed to:

defer upfront, ongoing, and future taxes,
achieve stable monthly income,
reduce management burdens and volatility,
access additional growth and future liquidity potential, and
enhance estate planning benefits.

Contact us to see if your clients qualify for a 1031 or 721 exchange or could benefit from the tax-advantaged income and growth options we offer.

Over accredited investors and their advisors have entrusted ExchangeRight with the stewardship of their wealth and more than 30% of the capital invested into our offerings on average comes from the Managing Partners’ own long-term clients. This experience provides strong alignment of interest with the goals and needs of investors, directly shaping how we structure and manage our investments.

Common Investor Needs

Tax Deferral

Investors are increasingly seeking strategies to grow their tax-advantaged income with DSTs and REITs, and can defer 100% of their capital gains and depreciation recapture taxes with careful 1031 and 721 exchange planning.

Capital Preservation

Preserving principal investment capital is paramount for investors who have spent decades or even generations building and protecting their wealth, especially given the reduced time horizon available to recover from a material capital loss for investors who are in or nearing retirement.

Stable Income

The vast majority of investors we work with are looking for stable, tax-advantaged income that they can rely on throughout their entire hold period, regardless of market or economic conditions.

Strategic Exits for Estate Planning Needs

Investors desire options to tailor their exit strategy to maximize the deferral or elimination of taxes, and to meet their and their heirs’ future investment, income, and estate planning needs.

Tax-Advantaged Solutions Structured
to Meet Investor Needs

Defer Taxes with a 1031 Exchange

Selling property held for investment or business can trigger taxes exceeding 35% of capital gains. A 1031 exchange can help defer all of those taxes so that investors keep all of their equity working on their behalf. Each investor’s tax situation is unique, so consult their CPA and our 1031 specialists throughout the process.

Sale Without a 1031 Exchange

For example, if you sell an investment property for $3.5 million which was originally purchased for $500,000, you would realize $3.0 million in capital gains. Approximately 35%+ of this gain, $1.05 million, may be owed in capital gains taxes, leaving only $2.45 million available to reinvest after taxes without a 1031 exchange.

Sale With a 1031 Exchange

Using a 1031 exchange to reinvest the proceeds from the sale of an investment property can defer all capital gains and depreciation recapture taxes, preserving 100% of your capital for the next investment opportunity and increasing your total income and return potential.

How to Complete a Successful 1031 Exchange

The IRS provides rules that investors must follow to defer their taxes via 1031 exchange. Though we have outlined the basics of a standard 1031 exchange below, each investor’s case is unique and it is best for advisors or representatives to work with their clients’ CPA and with one of our 1031 specialists to leverage our decades of experience and expertise to help you to help navigate each 1031 exchange every step of the way.

The ideal time to explore your 1031 exchange options is before your client sells their property, however, we can still help your clients successfully complete their exchange and defer their taxes through day 45 of their identification period that follows the sale of their property.
You must use a Qualified Intermediary to hold the proceeds of your sale at closing. Failure to do this will result in a failed exchange, which is irreversible. We can refer your client to many of the top national firms that work with us to provide this service.
Make sure your contract indicates your client’s intent to complete a 1031 exchange prior to closing. This can be as simple as including the following sentence in your contract: “Seller intends to complete a 1031 exchange with the proceeds from the sale.”
You have 45 days from the date of sale to identify the investments that your clients intend to use to complete the exchange. There are several IRS rules that must be followed at this stage that we can help your clients navigate to ensure they defer 100% of their taxes.
You have 135 days after your 45-day identification period to close any of the investments your clients have identified for their exchange. That said, we help the vast majority of investors complete their exchange almost immediately after their 45-day period starts to eliminate the risks of a failed exchange and to begin earning monthly income as soon as possible after their sale.

View All 5 Steps

Utilizing DSTs in 1031 and 721 Exchanges

Your accredited clients who need stable, passive income and relief from the burdens of management can use a Delaware Statutory Trust (DST) to complete their 1031 exchange. Some DSTs provide investors with tax-deferred access to a REIT upon exit via 721 exchange, which is covered in more detail below.

According to IRS Revenue Ruling 2004-86, a properly structured DST investment can qualify for 1031 exchange tax deferral. With a DST, investors own shares of a diversified portfolio of income-producing real estate that is institutionally managed on their behalf. The DST holds title to real estate and is structured to shield its owners from personal liability, while entitling them to a pro rata share of the rental income, tax deductions, long-term growth potential, and estate planning benefits of the underlying real estate.

Potential Features of Delaware Statutory Trusts

Can Be Diversified Across Multiple Properties or Portfolios

Structured to Avoid the Burdens of Management

Can Be Diversified Across the Nation and by Asset Class

Structured to Provide Stable Monthly Income

Limited Liability and Non-Recourse Financing (if Debt is Needed)

Investment Amount Customized to Fit Exactly What is Needed

Investors Can Close Escrow in as Few as 1-3 days

Multiple Exit Options Including Access to a REIT

Each client’s tax situation is unique so please ensure that your client is consulting their CPA or tax counsel throughout the process. DSTs are investments in real estate and pass through the potential benefits and risks of real estate on a pro rata basis, which provided limited liability protections but also can experience losses of income and principal with underperformance. It is critical to complete due diligence to select those DSTs that are most suitable for your clients' needs and the current macroeconomic environment.

Download Our 721 Investing Strategy Guide

Gain Tax-Deferred Access to a REIT via 721 Exchange

721 exchange investors can benefit from the upfront tax deferral, stable income, capital preservation, and exit optionality of the DST, and then can gain tax-deferred access to an even more broadly diversified REIT structured to provide monthly income, capital preservation, additional growth potential, quarterly liquidity, and enhanced estate planning benefits.

Potential Benefits of a 721 Exchange into a REIT

Increased Return Potential

Increased Return Potential from the REIT

Enhanced Diversification

Increased Diversification and Scale Intended to Reduce Risk

Long-Term Growth Potential

Access to a Growing Portfolio that May Enhance Investor Value

Quarterly Redemptions

Access to the REIT’s Quarterly Redemption Program

Dividend Reinvestment Option

Reinvest at a Discounted Price to Potentially Compound Returns

Composite Tax Filing

May Reduce Tax Filings Associated with Broader Diversification

Tax Benefits for Heirs

Step-Up in Basis to Eliminate Past Capital Gains Tax for Heirs

Divisibility for Estate Planning

Ease of Divisibility of Shares for Estate Planning Purposes

Past performance of ExchangeRight, its principals, and its offerings does not guarantee future results. There is no guarantee that the Essential Income REIT will achieve its investment objectives.

Selecting the Right Asset Classes Based on the Macroeconomic Cycle

Click here to access our latest macroeconomic update. Learn how we serve the needs of your clients by selecting the right real estate for our DSTs based on where we are in the macroeconomic cycle.

ExchangeRight’s Net-Leased DSTs

Example Offering:
Essential Income 3 DST (Closed Offering)

Portfolio Summary

ExchangeRight Essential Income 3 is a diversified portfolio of properties with net leases backed by historically recession-resilient tenants, with a 5.50% current cash flow featuring a 20-year master lease guarantee from the ExchangeRight Essential Income REIT. This offering is intended to provide investors with current monthly income and accelerated access to the Essential Income REIT via a tax-deferred 721 exchange after a targeted two-year hold period.

$22,615,000

Equity Offering Amount

100%

Equity Offering

5.50%

Current Cash Flow

Properties

20 Years

Master Lease Term

2 Years

Targeted Hold Prior to Exchange into REIT

ExchangeRight’s Net-Leased Aggregation Strategy

Essential Income 3 DST is structured to take advantage of ExchangeRight’s aggregation strategy by providing accelerated access to the Essential Income REIT for DST investors via a tax-deferred 721 exchange after a targeted two-year hold period.

ExchangeRight’s aggregation strategy has a proven track record of 26 full-cycle Net-Leased DST offerings to date, each delivering capital preservation and attractive returns to DST investors while simultaneously enhancing and providing tax-deferred access to the Essential Income REIT’s diversification, scale, and value across more than properties through . Learn more about the Essential Income REIT below.

To access currently available DSTs for your accredited clients, click below to connect with one of our 1031/721 Specialists.

Access Current DSTs

Stats above as of . There is no guarantee this offering will achieve its investment objectives, hold period, or exit strategy. Past performance of the Sponsor does not guarantee future results. Cash flow distributions are calculated by multiplying the current monthly investor distribution by 12, then dividing the results by the total available equity.

Begin With the End in Mind: Our Aggregation Strategy

We seek to enhance value, reduce risk, and optimize estate planning benefits through our aggregation strategy. This process begins with the formation of DSTs for 1031 and 721 investors and culminates in the aggregation of these properties into an even more diversified income-producing portfolio, the Essential Income REIT.

Summary of ExchangeRight’s Essential Income REIT

Industry Allocation

5.93-6.30%

Current Annualized Distribution - Class A, D, and I

9-10%+

Historical Tax-Equivalent Yield¹

103.31%

AFFO-to-Distribution Coverage Ratio ITD Through 3/31/26²

Historically Recession-Resilient Tenants

BBB

Average Long-Term Tenant S&P Credit Rating³

$1.5+B

in Asset Value as of

Properties Diversified Across 306 Markets and 37 States

Quarterly

Redemption Program Structured to Provide Liquidity

¹Tax-Equivalent Yields are based on 2025 results, current offering price, a 37% and 8% federal and state income tax rates, and a 3.8% Medicare surcharge tax. Exact tax-equivalent yields will vary by investor. ²AFFO refers to “Adjusted Funds from Operations” and ITD refers to “Inception-to-Date.” ³The average long-term S&P credit rating is presented as a simple average of the credit ratings of the REIT’s tenants with publicly rated debt. All information is as of unless otherwise stated. Cash flow distribution is calculated by multiplying the current monthly investor distribution by 12, then dividing the result by the investment offering price. Past performance of the Sponsor, Tenants, and past offerings does not guarantee future results.

Click the link below if you are interested in reviewing the Essential Income REIT on behalf of your clients.

The Essential Income REIT

Performance of ExchangeRight’s Aggregation Strategy

7.40%-9.74%

Returns Across All 26 Full-Cycle Net-Leased DST Offerings

100%

Rent Collections Across All Net-Leased DSTs During Hold Period as of 3/31/26

$5.4+ Billion

Broadly Diversified Net-Leased DST Portfolios for REIT Acquisition Pipeline

8.49%

Annualized REIT Class I Returns on Purchase Price ITD Through

6.34%

Average Rent Increases Executed in the REIT
2025 Across 31 properties and 10 Tenants

$1.5+ Billion

Broadly Diversified Net-Leased REIT Portfolio Based on Third-Party Valuations Provided by KPMG as of

Investment, aggregation, liquidity objectives, timing, and results are not guaranteed. Investing in any offering involves risk. DST and REIT Platform stats above as of unless otherwise noted. Aggregation statistics are as of . Past performance of ExchangeRight, its principals, and its offerings does not guarantee future results.

About ExchangeRight

For over two decades, ExchangeRight’s Managing Partners have dedicated themselves to solving the unique challenges facing investors who need tax deferral, capital preservation, dependable passive income, and optimized estate planning options.

Our conservative, investor-centric strategy is informed by hard lessons learned as wealth managers through the Great Recession about which assets, portfolios, and wealth-management strategies can protect investors through even the most difficult economic cycles.

Our approach has resulted in a track record that is unparalleled in the industry, with 36 full-cycle events and 100% of all past and current offerings across more than of assets under management meeting or exceeding projections since ExchangeRight’s inception.

9-10%+

Historical Tax-Equivalent Yields for the Essential Income REIT Investors¹

$2.6+ Billion

of Distributions, Capital, and Gains Returned to Investors ITD

8.49%

Average Annual Total Return on All 34 Full-Cycle Offerings

100%

Offerings That Have Met or Exceeded Cash Flow Projections

¹As of . Tax-Equivalent Yields are based on 2025 results, current offering price, a 37% and 8% federal and state income tax rates, and a 3.8% Medicare surcharge tax. Exact tax-equivalent yields will vary by investor. Unless otherwise noted, statistics are as of . Past performance of ExchangeRight, its principals, and its offerings does not guarantee future results.

Which Next Step is Right for Your Client?

I have a client who needs tax-advantaged income for a cash investment or IRA.

I have a client who is selling investment property and needs to defer their taxes.

I have a client who wants to perform a tax-deferred exchange into a REIT.

Tax-Deferred 1031
& 721 Exchange Solutions