Case study
Case Study: Failed Exchange
Discover how Breakwater helped a client save a failed 1031 exchange.
Maximizing Gains and Minimizing Taxes at a Glance
Our client was in the process of performing a 1031 exchange but failed to close within the allotted 180 day timeline. He was resigned to the fact that he would have to pay capital gains tax on the $1.2M in proceeds, which equaled approximately $400k.
A Time-Sensitive Strategy With Built-In Liquidity
Instead of paying that tax to the IRS, the client invested approximately $500k into two different bonus depreciation funds for 2 different sponsors in the gas station convenience store asset class.
Outcome
The Outcome: A Compliant Exchange and Smart Reentry Thanks to Breakwater Exchange
The client was able to generate enough depreciation in the current year to offset the entire capital gain. Instead of having a sunk cost due to paying the tax, he now owned shares of roughly 90+ different gas stations and attached convenience stores that were being leased by investment grade tenants across the country. These assets now generate approximately $25k a year for the investor in passive income with the opportunity of potential appreciation I the future once they are sold.
Breathe Easy With Breakwater Exchange’s Cash Saving Investing
When timing isn’t on your side, Breakwater Exchange structures compliant, creative strategies that give you breathing room. Our cash-out solutions solve for debt while unlocking liquidity, so you don’t have to compromise your next investment.
FAQs About Our Cash Out and Zero Strategies
Can I complete my exchange before I identify a new property?
Yes. Breakwater Exchange uses IRS-compliant Zero strategies to help you complete your exchange on time , even if you’re still evaluating your next move.
What happens to my proceeds while I wait to reinvest?
Breakwater Exchange helps structure a refinance option after the Zero closes, allowing you to access your proceeds and place them into income-generating vehicles until you’re ready.
Can I still buy with cash later if I used a Zero to solve for debt?
Absolutely. With Breakwater Exchange, your debt replacement is already handled, giving you the freedom to purchase your next property without new bank debt.
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Access Investment Offerings Other Brokers Can’t Provide
Breakwater Exchange’s expert guidance helps you maximize returns while minimizing tax exposure, so you can invest with clarity and confidence.
- years of experience
- 20+
- in DST transactions
- $1B+
- states licensed
- 50
- vetted national sponsors
- 8