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Founded in 2015, Medalist is a real estate investment trust (REIT) that enables investors to convert their direct real estate investments to tax-advantaged real estate stores of wealth that are optimized for income, liquidity, and wealth preservation using DST, 1031 and 721 exchange solutions.
Through Medalist, real estate investors can exchange their direct real estate investments for ownership in Medalist REIT without incurring capital gains taxes. While invested in Medalist REIT, investors continue to enjoy steady cash flow and real estate appreciation without the hassles of managing investment properties.
The Delaware Statutory Trust (DST) structure originated from Delaware’s statutory trust laws, which date back to the 1980s. This legal framework allows for the creation of a trust that can hold, manage, and invest in real estate. DSTs became especially popular after the IRS issued Revenue Ruling 2004-86, which recognized DSTs as eligible for 1031 exchanges. This ruling opened the door for real estate investors to defer capital gains taxes while enjoying the benefits of passive ownership in large, professionally managed properties. Medalist’s platform simplifies the process of investing in DSTs, offering individual investors access to high-quality real estate opportunities.
The 1031 exchange refers to Section 1031 of the U.S. Internal Revenue Code. Established in 1921, this provision allows investors to defer capital gains taxes when they exchange like-kind properties. The 1031 exchange has been a cornerstone for real estate investors looking to optimize their portfolios without incurring immediate tax liabilities. Medalist provides a platform that simplifies the 1031 exchange process, enabling individual investors to leverage these tax benefits effectively.
The 721 exchange refers to Section 721 of the U.S. Internal Revenue Code, the same tax code that includes the well-known Section 1031 exchange. Established in 1954, Section 721 has been utilized by institutional investors for decades to minimize taxes on real estate transactions. Medalist has developed a platform that allows individual property investors to access the same tax benefits offered by the 721 exchange.
At Medalist, we’ve meticulously selected properties that fit our core portfolio and stringent financial return criteria, packaging these assets into 1031 compatible, low-cost Delaware Statutory Trusts (DSTs). This allows investors to acquire the precise dollar amount of replacement property needed for their 1031 exchange by purchasing a percentage interest in a DST.
After holding your investment in the DST for the required period to comply with 1031 regulations, your DST beneficial interest will be converted into Medalist REIT equity through a tax-deferred 721 exchange. This provides you with an allocable, hassle-free, and diversified store of real estate wealth in the form of Medalist REIT OP Units.
As an OP Unitholder, you can manage your tax liability and liquidity needs more effectively by gradually liquidating your Medalist equity by converting your OP Units into liquid, publicly traded Medalist REIT shares (Nasdaq: MDRR).
As an investor in Medalist, you gain access to cash flow generated from the rental income of the REIT’s portfolio of high quality commercial real estate assets, and you continue to benefit from potential real estate appreciation based on the portfolio’s performance. This transition allows you to adopt a fully passive approach to real estate investing, giving you back countless hours of time and providing invaluable peace of mind. All operations related to the properties in Medalist REIT, including leasing and repairs are fully managed by our team of professionals.
The 721 and 1031 exchange allows you to defer significant capital gains and depreciation recapture taxes that could be as high as 42.1% with a traditional property sale. After the minimum holding period, you can manage your tax liability more effectively by gradually liquidating your Medalist equity. Additionally, Medalist equity benefits from a step-up in tax basis upon inheritance, providing significant tax savings for your heirs when they decide to liquidate their equity. We recommend consulting with your tax advisor, attorney, and/or the IRS website to understand how Medalist can complement your personalized tax planning.
