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Tax strategy for storage owners

The 1031 is one option. There are seven more.

Most owners hear about their options after closing, from their accountant, which is the worst possible time. This page covers what Oakside walks owners through before a facility ever goes to market.

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What a 1031 exchange actually does.

A 1031 exchange lets you sell an investment property and roll the proceeds into a like-kind replacement property without paying capital gains tax in the year of the sale. The tax is deferred rather than erased, and it stays deferred as long as you keep exchanging. Your heirs still receive a step-up in basis.

The structural flaw is the order of operations. You sell first, then you hunt, and the clock starts at your closing.

45days

From the day your sale closes, you have 45 days to identify the replacement property in writing. Good storage assets draw multiple offers, so 45 days is not long to find the right one.

180days

You have 180 days from the same closing to complete the purchase. Miss either deadline and the exchange fails, and the full tax bill lands in that year.

The problem with the obvious answer

Most owners do not want another property to manage.

The 1031 asks you to solve a tax problem by buying more of the thing you are trying to stop doing. Owners say it plainly: I am already managing this, so why would I go and manage another one. That defeats the whole purpose.

Then there is the timing. Identify in 45 days, close in 180, in a market where the good assets draw competing offers. Owners who have watched that clock describe it as a scramble, and a scramble is not how you want to pick the asset that carries your retirement.

None of that makes the 1031 wrong. It makes it one option out of eight, and the only one most owners are ever shown.

“Most owners tell me they're going to pay 30% in taxes, then don't have a plan in place to re-invest their proceeds. We're here to let them know about the options available to them most have never heard of.”

Nolen Masserman, on what owners tell him. What you would actually owe depends on your basis, your entity, your state and your depreciation history, which is a conversation for your CPA.

The structures

Eight structures, and what each one is for.

The terminology is ours, but the mechanics are in the tax code, and every one of them has to be built by your own CPA and tax attorney.

  1. 01

    The 1031 Exchange

    Sell the facility and roll the proceeds into a like-kind replacement property, and the gain is deferred rather than paid. You sell first and hunt second, on a 45 and 180 day clock.

  2. 02

    The Buy-First Exchange

    Acquire the replacement facility before you sell, so a 45-day scramble is not the thing setting your price.

  3. 03

    The Institutional Handoff

    Contribute the facility rather than selling it, and own a piece of hundreds of storage facilities rather than one facility.

  4. 04

    The Two-Step Rollup

    Sell on the open market to the buyer who pays the most, then move the proceeds into a passive institutional position in two steps.

  5. 05

    The Legacy Income Trust

    For owners who already give to a charity: lifetime income, a deduction in the year of the transfer, and the asset out of the estate.

  6. 06

    The Banker's Seat

    You carry the note. The tax on the gain spreads across the payments instead of landing in one year.

  7. 07

    The Diversified Installment Trust

    Installment treatment without needing a buyer who wants to be your borrower, and no requirement to go back into real estate.

  8. 08

    The Decade-Zero Fund

    Roll the gain into a qualified opportunity fund, hold ten years, and the appreciation on that new investment comes out tax-free.

Every structure carries an honest catch. The guide names the seven beyond the 1031, side by side, in a comparison table covering deferral, passive income, and the step-up for heirs.

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Which fits you

There is no best one. There is only the one that matches what you want the day after closing.

  1. 01 Do you want to keep operating real estate, or are you finished?
  2. 02 If you are finished, do you want income, or do you want growth?
  3. 03 Do your heirs want the cash flow without owning or managing the property?
  4. 04 Is there a charity already in your life?
  5. 05 How much complexity are you willing to carry, and how much of it will you pay counsel to manage?

Answer those five questions, and your options start to narrow. The key is choosing an exit strategy that fits the life you want, then determining the price you actually need, not the other way around. Sometimes, the right structure can make selling today more attractive than holding out for tomorrow's price.

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Education, not advice

We're not a registered investment advisor. We don't provide investment advice, but we can help educate sellers on some of their options that they might not know about.

Oakside Companies is not a registered investment advisor and does not provide tax, legal, or investment advice. The Pre-Sale Strategy Session is educational. Every structure discussed must be evaluated, built, and signed off by your own CPA and tax attorney, and Oakside coordinates with your advisors rather than replacing them. Where Oakside introduces institutions that execute these structures, Oakside is not compensated for those introductions. Illustrative figures are illustrations, not projections or client results.

Oakside Companies. Florida real estate broker licence BK3367978.

The original guide

Are you in a 1031 already?

If you are mid-exchange and looking for the replacement property, this is the page you came for. Tell us your criteria and we will send matching listings as they launch.

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Featured Benefits

1031 Exchanges allow investors to defer capital gains taxes on any exchange of like-kind properties. If you are currently in a 1031 exchange or think you may in the future – please submit your contact information below to be notified of listings that fit your criteria.

Tax Deferral and Savings

By reinvesting the proceeds from the sale of a property into a like-kind replacement property, owners can defer paying capital gains taxes, allowing them to keep more of their investment capital working for them. This tax deferral can result in substantial savings and increased financial flexibility.

Portfolio Diversification

By exchanging their property for a different type or location of property, owners can spread their investments across various asset classes or markets, reducing concentration risk. This diversification strategy can enhance the resilience and long-term stability of their real estate portfolio.

Wealth Accumulation and Growth

By deferring capital gains taxes, owners can reinvest the full proceeds from the sale into a larger or higher-performing property. This strategy allows for continued growth and appreciation potential, potentially accelerating the overall wealth-building process.

Are you in a 1031? Let us help
you find your next investment property

Pre-Sale Strategy Session

Thirty minutes that can change what you keep from the sale.

A confidential call with Oakside's founders. We narrow the seven deferral structures beyond the 1031 to the two or three that fit your facility, and run the number you actually need after closing.

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