Category
721 UPREIT Exchange
Section 721 UPREIT conversions: contributing property for operating-partnership units, basis carryover, the path to REIT shares, and how a 721 differs from a 1031.
- The step-up at death for OP units, and the state tax layer
OP units held at death receive a Section 1014 basis step-up that eliminates deferred gain, but state sourcing rules can outlive the federal fix.
- OP unit distributions, phantom income, and conversion to REIT shares
OP unit distributions reduce basis, taxable allocations can outrun cash, and converting units to REIT shares is the second taxable moment.
- Section 721 contributions: basis carryover and the 7-year hold
A 721 UPREIT contribution defers gain, but basis carries over into the OP units and a seven-year covenant governs when built-in gain can crystallize.
- Section 721 UPREIT tax treatment: contribution, basis, and the path to REIT shares
A 721 UPREIT contribution defers gain at the moment property is exchanged for operating-partnership units, but the basis carryover, distribution rules, and eventual conversion to REIT shares trigger consequences that look nothing like a 1031.
- 1031 vs 721 UPREIT: when the conversion makes sense
The 721 exchange converts your deferred gain into REIT operating-partnership units, offering liquidity and diversification that a direct 1031 cannot. The conversion is not always the right call.