Investment Options

Why Contributing Property to the Legacy Fund Could be More Than a Smart Financial Decision


Billy Fox, CPA

Senior Vice President

When planning an investment, it’s important to understand the impact it will have for you financially and the time and effort required to oversee that investment. What if one could alleviate the entire burden of ownership without losing the financial component? What value would you place on having more time with the people you love or doing what you love?

When selling property and seeking to defer tax, investors often consider 1031 exchanges, Delaware Statutory Trusts or UPREIT transactions. While those offerings enable owners to defer tax, they may have some shortfalls, including time constraints, high fees, single asset risk, and/or public market volatility. While partnering with MLG Capital to navigate the waters of a 1031 exchange could be a better alternative than conventional tax-deferred solutions, an even better idea may be to partner with MLG Capital and contribute your property to the Legacy Fund.

Unlike our series of closed-end funds, like Private Fund V, the Legacy Fund is perpetual and designed to allow accredited investors to contribute real property into the fund. It’s an exceptional exit strategy for high-net-worth investors with appreciated real estate assets. There are three main benefits to contributing to the Legacy Fund.

  • Passive Ownership
  • Diversification
  • Tax Efficiency

One of the most intriguing benefits for investors contributing property is a move from active to passive ownership. The Legacy Fund helps us relieve you of that day-to-day burden of being a landlord. No more time spent managing the asset, negotiating with vendors, or handling tenant complaints. MLG has 34+ years of investment and property management experience to draw from, and the infrastructure in place to do it well.

When owning a single asset, you assume all the inherent risk of that property. One of the easiest and best ways to lower your risk, is to invest in multiple properties. Spreading risk through numerous assets, across differing property types and geographies is a key benefit of the Legacy Fund. Very simply, contributing your property can offer you units in a diversified fund which makes quarterly distributions based on available cash.

Lastly, there are potential tax benefits for investors contributing property to the Legacy Fund. Generally speaking, contributions to the Fund are tax-deferred under section 721 of the IRS code.

Furthermore, investors may recognize tax savings from the Legacy Fund’s overall performance and utilization of depreciation. Contributing to the Legacy Fund can also provide marked benefits when used as a part of a comprehensive estate plan, with the added benefit of potential estate tax savings.

The Legacy Fund offers flexibility and liquidity for investors and their heirs if either would like to cash out of the fund through a unit redemption process.

The Legacy Fund is the first of its kind and growing rapidly. If you’re an accredited investor with property and looking for an excellent exit strategy, you can achieve passive ownership, tax benefits and a more diversified portfolio of assets if you decide to contribute your asset to the Legacy Fund.

Billy Fox, CPA is Senior Vice President at MLG Capital. He works closely with clients seeking a tax-deferred exit strategy from their real estate holdings. He is always ready for a round of golf and loves to spend time in northern Wisconsin.

The information contained in this article (this “Article”) is for informational purposes only and is qualified in its entirety by reference to the Confidential Private Placement Memorandum (Version 2.0) for MLG Legacy Fund LLC (as modified or supplemented from time to time, the “Legacy Fund PPM”), a copy of which is available upon request and should be reviewed before investing in the Legacy Fund.  This Article is not an offer to sell interests in a security. Offers to sell interests in a security can only be made to a qualified purchaser by the delivery of the appropriate disclosure documents accompanied by a Subscription Agreement or property Contribution Agreement and associated documents. An investment in the Legacy Fund is subject to the terms of the cash Subscription Agreement or property Contribution Agreement to be entered into between the investor and the Legacy Fund. This Article is not intended to be relied upon as the basis for an investment decision and is not, and should not be assumed to be, a complete description of the Legacy Fund.  The contents of this Article should not be considered as business, legal or tax advice, and each prospective investor in the Legacy Fund should consult its own business advisor, attorney and tax advisor regarding an investment in the Legacy Fund.

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