At North Star Brokerage & Advisory, we specialize in guiding owners of management-intensive properties through a 1031 Exchange — helping them reinvest their equity into truly passive, income-producing real estate.
What Is a 1031 Exchange?
A 1031 Exchange is a section of the U.S. Internal Revenue Code that has existed for over 100 years. It allows real estate investors to defer paying capital gains and depreciation recapture taxes when selling a property, as long as they reinvest the proceeds into another qualifying property.
This isn’t a loophole or an obscure tax trick — it’s a time-tested strategy used by some of the nation’s most sophisticated investors. At North Star, we take a strategic approach to help our clients maximize wealth, minimize taxes, and create long-term financial security through 1031 Exchanges.
Why a 1031 Exchange?
A 1031 Exchange is the only way for property owners to sell and avoid immediate capital gains taxes while rolling 100% of their equity into new investments. For many of our clients, this strategy provides a smooth path out of hands-on property management and into stable, long-term passive income.
This type of exchange is most valuable for owners who have held their property for many years or who have significantly increased its value through improvements, operations, or market growth. In these cases, selling outright would trigger a large capital gains tax liability.
Without a 1031 Exchange, the IRS will tax:
- Federal capital gains tax: up to 20%
- Depreciation recapture tax: 25%
- Net Investment Income Tax (NIIT): an additional 3.8% (for high-income earners)
- State capital gains taxes: varying by state — from 0% in states like Texas and Florida to as high as 13.3% in California
In total, an investor could easily see 30–37% of their gain lost to taxes upon a sale.
A 1031 Exchange allows investors to defer this tax hit entirely, preserving 100% of their equity for reinvestment into cash-flowing replacement properties.
Our Specialty: Absolute Triple Net (NNN) Properties
We focus on sourcing long-term, absolute triple net lease (NNN) properties with corporate or publicly traded tenants. These properties are professionally managed, with the tenant responsible for:
✅ All repairs and maintenance
✅ Property taxes
✅ Insurance costs
The landlord’s role is reduced to collecting monthly rent.
Typical leases span 15–20 years and are backed by some of the strongest credit tenants in the country.
Example Tenants Include:
✅ Dollar General
✅ AutoZone
✅ Walgreens
✅ Chick-fil-A
✅ Starbucks
✅ Other national and corporate credit tenants
Why Clients Choose This Path
Many of our clients are in their later years of ownership and want to exit management-intensive properties such as RV parks, mobile home communities, marinas, or campgrounds. A 1031 Exchange allows them to:
✅ Eliminate daily management headaches while still earning consistent, predictable cash flow
✅ Diversify or consolidate portfolios into stable, corporate-backed real estate
✅ Passively own properties long-term without worrying about operations
✅ Plan for estate transfer: upon their death, heirs receive a step-up in basis, resetting depreciation and avoiding capital gains on past appreciation
✅ Increase liquidity: NNN properties are more easily sold or traded than management-heavy assets
Credibility You Can Trust
We have conducted dozens of strategic 1031 Exchanges for owners of multifamily properties, outdoor hospitality properties, land, and more, successfully redeploying their equity into individual properties or tailored portfolios that meet their long-term goals.
In total, we have helped investors defer over $100 million in taxes through this process — proving that the right strategy not only preserves wealth but builds lasting legacies.
The Long-Term Advantage
Most clients who exchange into NNN assets do so with the intent to hold them until they pass, knowing their heirs will inherit properties with:
- Reset basis for tax purposes
- Continued passive income
- Strong resale value and liquidity
Unlike management-heavy properties, NNN assets do not deteriorate in value due to operational complexity or mismanagement, making them a safe legacy asset for the next generation.
Case Study: Royal Palms
One of our recent success stories is the Royal Palms 1031 Exchange, where we guided the owner through the sale of a management-intensive property and successfully redeployed their equity into stable, long-term triple net investments that met their income and estate planning goals.
Why Work With North Star
Our team has deep expertise on both sides of the exchange:
- The unique challenges of selling management-intensive assets like RV parks and mobile home communities
- The benefits and intricacies of reinvesting into passive, corporate-backed triple net investments
We guide you through the entire process — from selling your current property, to identifying qualified replacements, to securing offers and meeting all IRS guidelines for a smooth, tax-deferred exchange.
Ready to explore your 1031 Exchange options?
