What is a 721 Exchange?
A 721 tax exchange, also referred to as a UPREIT exchange, provides a tax-efficient avenue for investors to transition their real estate holdings into a REIT structure. Through this exchange, investors contribute their properties to a Real Estate Investment Trust (REIT) in exchange for partnership units, enabling them to defer capital gains taxes until they decide to sell these units. This mechanism offers investors the opportunity to diversify their real estate portfolio, access potential ongoing income distributions, and gain liquidity while deferring taxes on the appreciated value of their properties.