Transform Your SFR Investment with a 721 Exchange
A 721 exchange (also known as an UPREIT) offers residential rental property owners a powerful way to defer capital gains taxes while transitioning from active landlord to passive investor. By contributing your property to a professionally managed real estate fund, you’ll receive ownership units that provide diversified income without the headaches of property management.
Unlike a 1031 exchange with its tight deadlines and replacement requirements, a 721 exchange offers a streamlined path to tax-deferred passive income, professional portfolio management, and simplified estate planning—all while preserving your real estate investment position for long-term growth.
A 721 exchange is the federally approved method of transferring your property to a real estate fund in exchange for shares in that fund.
A 721 real estate fund is an investment vehicle that accepts capital contributions—both cash and real property—from multiple investors, to create a diversified portfolio of real estate assets, designed to provide passive income and appreciation for its owners.
1031 vs 721 Exchange
Two Paths to Tax-Deferred Real Estate Investing
Both 1031 and 721 exchanges offer powerful tax deferral strategies for real estate investors, but they serve different needs. A 1031 exchange lets you swap one investment property for another while deferring capital gains taxes, requiring you to identify replacement properties within strict timelines and continue as an active owner.
A 721 exchange (UPREIT) allows you to contribute your property to a professionally managed real estate fund in exchange for ownership units—transitioning from active landlord to passive investor while still deferring taxes.