UPREIT 721 Contribution Calculator

721 contributions defer tax. This calculator sizes.

Property value

Cost basis

Effective tax rate %

OP unit value

Deferred tax

$1,260,000

OP units received

177,778

Capital gain deferred

$4,500,000

How the math works

Capital gain = value − basis. Deferred tax = gain × rate. Units = property value / unit value.

$8M property, $3.5M basis, 28% rate: $4.5M gain, $1.26M deferred. 177,778 OP units at $45. Converts 1:1 to common; timing of conversion triggers eventual tax.

How to Use

Enter property value.
Enter cost basis.
Enter tax rate %.
Enter OP unit value.
Read deferred tax and units received.

Frequently Asked Questions

What's 721?

Section 721 of IRC: tax-free contribution of property to partnership in exchange for partnership interest. Used in UPREIT structures (Umbrella Partnership REIT). Property owner receives OP units convertible to common shares later. Defers gain recognition.

Why UPREIT?

Allows property owner to diversify into REIT shares without triggering tax. OP units pay REIT-equivalent distributions. Can convert to common shares on holder's schedule — controlling timing of eventual tax. Popular for legacy families consolidating estates.

Lock-up?

Typical: 12-24 month lock-up before conversion to common. Dividend structure matches REIT common. Governance: OP unit holders may have protective rights. Liquidity tradeoff — units convert 1:1 to shares, then freely tradeable.