Unlock Your Passive Lifestyle

Episode SummaryTax attorney and CPA Austin Carlson of Gray Reed breaks down partnership 1031 strategies (drop-and-swap, PIN notes, TICs) and the new Opportunity Zones 2.0 program made permanent under the One Big Beautiful Bill Act. If you own real estate with partners or are planning a business exit, this episode lays out the structures wealthy investors are using to defer — and often eliminate — capital gains tax.Key Takeaways• Solo 1031s are simple. Partnership 1031s require careful planning. When partners have different goals, involving a tax attorney early can help avoid costly mistakes.• A “Drop and Swap” separates partner interests before a sale. Some partners can cash out while others complete their own 1031 exchanges. The IRS closely examines timing and intent.• A Partnership Installment Note (PIN) can help when timing is tight. It allows an exiting partner to receive most proceeds upfront while keeping the partnership intact.• QOZ 2.0 expands tax benefits beyond real estate. Beginning January 1, 2027, gains from real estate, businesses, crypto, and art may qualify for Opportunity Zone benefits.• QOZs preserve basis, while 1031s require full reinvestment. Investors only need to reinvest the gain in a QOZ, which can provide greater liquidity.• A Qualified Opportunity Fund (QOF) can be a backup plan. If a 1031 exchange falls through, a QOF may provide an alternative way to defer gains.Chapters00:00 Intro: Partnership Structuring, OZ 1.0 vs. OZ 2.000:47 Meet Austin Carlson (JD, CPA)02:00 Tax Attorney vs. Accountant04:35 When to Involve a Tax Attorney in a 103107:55 "Drop and Swap" Strategies Explained10:30 Partnership Exit Scenarios and Loan Challenges14:00 Partnership Installment Note (PIN Note)17:55 IRS Intent Rules and Partnership Considerations20:00 When a Tax Attorney Is Worth the Cost23:00 Case Study: $50M Texas Ranch Exchange26:30 Opportunity Zones for Art, Business, and Real Estate Gains28:20 QOZ Origins and Evolution31:00 1031 Exchanges vs. Opportunity Zones35:30 Core QOZ Benefits: Defer, Reduce, Eliminate38:00 QOZ 2.0 and Permanent Tax Incentives40:30 Deferral, Basis Step-Up, and Tax-Free Growth Explained43:00 $1M Gain Example Breakdown44:30 New QOZ Maps and Substantial Improvement Rules47:30 QOZ vs. 1031: Which Strategy Wins?52:00 Timing Rules, K-1 Extensions, and 180-Day Deadlines54:30 Using a QOZ as a Backup for a Failed 103156:00 Creating Your Own Opportunity Zone Fund58:00 Existing Property Owners in Opportunity Zones1:00:00 Wrap-Up and Future DiscussionAbout the GuestAustin Carlson, JD, CPAPartner | Gray Reed & McGraw LLP | Houston, TexasAustin is a tax attorney and CPA at Gray Reed, focused on complex real estate structuring, partnership planning, 1031 exchanges, Opportunity Zone funds, and M&A. Named Houston CPA Society’s “Young CPA of the Year” and a Texas Super Lawyers Up-and-Coming 100 honoree, he serves on the Texas Society of CPAs Federal Tax Policy committee and works nationally with sponsors, family offices, and business owners on transactions from a few million to nine figures.Connect with Austin: grayreed.com/our-people/austin-c-carlsonKeywordsPrimaryOpportunity Zones 2.0 • One Big Beautiful Bill • Drop and Swap 1031 • 1031 exchange partnership • Qualified Opportunity Fund • OZ 2.0 • capital gains deferral • OBBBA opportunity zonesSecondary & Long-TailSection 1031 • TIC exchange • PIN note • partnership installment note • swap til you drop • QOF • OZ vs 1031 • sell business defer capital gains • baby boomer business exit • new opportunity zone map 2026 • build your own opportunity zone fundTagsreal estate, passive income, tax strategy, 1031 exchange, opportunity zones, partnership tax, real estate law, M&A, business exit, capital gainsDisclaimerThis is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.There are material risks associated with investing in private placements, Delaware Statutory Trusts ("DSTs") and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and investors should read the PPM carefully before investing paying special attention to the risk section.Risks associated with 1031 exchange- A 1031 exchange has an identification period of 45 days from the sale of the relinquished property to identify a potential replacement property or properties depending on the value of the previous property. To defer all capital gains tax, you must reinvest the entire net proceeds from the sale of the relinquished property into the replacement property and acquire debt on the new property that is equal to or greater than the debt on the property that was just sold and relinquished.DST 1031 properties are only available to accredited investors which are typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two year.The rules and regulations of the Qualified Opportunity Zone (QOZ) Program are complex, and compliance with the QOZ Program comes with significant challenges such as appreciation unpredictability, certain neighborhoods may be less accommodating to development, illiquidity for up to ten or more years, availability and cost of construction and development financing uncertainty, development and redevelopment real estate risks, as well as a number of Jobs Act interpretation uncertainty which may impact future risks, if any.Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Fortitude Investment Group, LLC is independent of CIS.

In this episode of Unlock Your Passive Lifestyle, Tommy Thompson and Justin Kiehne dive into one of the most powerful - and most misunderstood - tools in real estate investing: the 1031 exchange. Whether you own a single rental condo or a multi-million-dollar commercial portfolio, this conversation covers what you need to know before you sell.What You’ll LearnThe basics of Section 1031 — a 100-year-old section of the tax code that lets you defer capital gains when exchanging investment real estate for like-kind investment real estateThe real cost of NOT doing an exchange — 20% federal capital gains + state taxes (up to 13% in California) can mean a 30%+ haircut on your equityThe critical timelines — day 0 (closing), day 45 (identification deadline), day 180 (purchase deadline), and why weekends and holidays countThe three identification rules — with a deep dive into the three-property rule and why you should always use all three slots as “parachutes”The three rules for a fully tax-deferred exchange — equal or greater purchase price, reinvest all equity, and replace all debtNet lease vs. DSTs — the pros and cons of owning a single Home Depot or Walgreens versus buying a fractional interest in a diversified portfolioKey Timestamps00:00 — The misunderstood 1031 exchange02:03 — The real math on a $1M sale: $300K–$400K in taxes to Uncle Sam05:24 — Prep work and the qualified intermediary07:50 — The 45/180 day clock and why end-of-year sales are dangerous09:37 — The three identification rules (and the “parachute” strategy)11:00 — Justin’s $10M Marina horror story15:29 — The three rules for a fully tax-deferred exchange18:15 — Like-kind, explained: it’s broader than you think19:05 — Farm land → mobile home parks (a real client story)21:02 — Net Lease 10125:40 — DSTs: institutional real estate in $100K slices29:02 — For the business-owner: sell the business and 1031 the real estate32:27 — Passive lifestyle & real estate retirementWho This Episode Is ForReal estate investors considering a saleBusiness owners prepping for retirementBaby Boomers planning their real estate exitGrowth investors using 1031s to build wealth fasterBrokers, CPAs, and attorneys looking for client strategiesThis is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.There are material risks associated with investing in private placements, Delaware Statutory Trusts ("DSTs") and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and investors should read the PPM carefully before investing paying special attention to the risk section.Risks associated with 1031 exchange- A 1031 exchange has an identification period of 45 days from the sale of the relinquished property to identify a potential replacement property or properties depending on the value of the previous property. To defer all capital gains tax, you must reinvest the entire net proceeds from the sale of the relinquished property into the replacement property and acquire debt on the new property that is equal to or greater than the debt on the property that was just sold and relinquished.DST 1031 properties are only available to accredited investors which are typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two year.The rules and regulations of the Qualified Opportunity Zone (QOZ) Program are complex, and compliance with the QOZ Program comes with significant challenges such as appreciation unpredictability, certain neighborhoods may be less accommodating to development, illiquidity for up to ten or more years, availability and cost of construction and development financing uncertainty, development and redevelopment real estate risks, as well as a number of Jobs Act interpretation uncertainty which may impact future risks, if any.Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Fortitude Investment Group, LLC is independent of CIS.