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721 UPREIT Basis Calculator
721 UPREIT exchanges defer gain. This calculator sizes basis and tax impact.
Deferred gain
$3,550,000
Current tax on cash
$42,000
Total gain
$3,700,000
How the math works
Total gain = value − basis. Current tax triggered on cash portion. Remaining gain deferred in OP units.
721 UPREIT is ultimately a liquidity and estate strategy. Investors who expect to sell OP units within 3-5 years often don't come out ahead vs direct sale plus investment — the REIT management premium plus tax drag at eventual conversion can exceed the deferral benefit. Best suited for multi-decade holders.
How to Use
- Enter contributed property value.
- Enter adjusted basis.
- Enter OP units received value.
- Enter cash/other received.
- Enter tax rate %.
- Read deferred gain.
Frequently Asked Questions
721 vs 1031?
1031: swap real property for real property. 721: contribute real property to REIT partnership for OP units (operating partnership units). OP units exchangeable to REIT shares (triggers tax). Strategy for exit from active RE.
OP unit tax?
OP units maintain original basis. Swap to REIT shares: taxable event. Hold OP units indefinitely (collect distributions): no current tax. Many investors hold for life and pass through estate (stepped-up basis, no recognition ever).
Who uses?
Estate planning (hold-till-death strategy). Exit from management (owner no longer wants property). Diversification (single asset → REIT portfolio interest). Most common path: private portfolio roll-up into public REIT for scale/liquidity.
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