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See how simple it is to exchange your property through Flock’s 721 Exchange platform—from initial consultation to fund ownership. Understand each step, what to expect, and how we handle the details for you.
Tax Advantages & Legal Structure
Transferring your rental property into Flock isn’t just about simplifying ownership—it can also unlock significant tax advantages. Through Flock’s 721 Exchange, you may defer capital gains taxes, preserve basis, and create a more flexible estate plan.
Immediate Impact of a 721 Exchange
Under IRS Section 721, when you contribute your property to Flock's Fund in exchange for shares, it is not a taxable event.
When you contribute your property to Flock's Fund, the IRS doesn’t treat it like a sale. Instead, your original tax starting point (“basis”) moves with you.
This lets you defer paying capital gains tax on your appreciation. Your money keeps compounding inside the Fund.
Paying down debt can affect your “basis,” which in some cases could create taxable income. However, under special partnership tax rules (Section 752), liabilities can be allocated in a way that helps preserve your ability to defer taxes.
So even if your property carries debt, Flock structures the exchange so you can still benefit from tax deferral.
Ongoing Tax Advantages
Continue to earn rental income and share in depreciation (a key real estate tax benefit) without an immediate tax hit. Your share of income and tax benefits is allocated based on your ownership in Flock's Fund. And because of how the structure works, you’re protected from being forced to realize capital gains before you’re ready.
Your tax advantages don’t end when you join Flock—they keep working for you as long as you’re invested.
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Taking cash flow from Flock reduces your partnership basis per IRC Section 731 and Revenue Ruling 84-53. Taking cash flow is generally non-taxable until you exceed your basis.
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All clients are allocated their share of the Fund’s taxable income each year, whether or not they take cash flow. Most income and expenses are split based on ownership. Depreciation is allocated differently, following tax rules under IRC Section 704(c).
Liquidity & Estate Planning Benefits
Seamless Transfer
Step-Up in Basis
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Let Flock Streamline Your Taxes
One Annual Tax Packet
Each year, you’ll receive a consolidated packet prepared by KPMG, including your federal K-1, K-3, and any applicable state K-1s. All documents are delivered by April 1 through your Client Portal.
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Composite Filings
For eligible non-residents, Flock can file and pay on your behalf in certain states, simplifying multi-state tax compliance.
Curated Portfolio Access
Your exchange is reported via Form 1099-S, alongside additional filings (Form 4797 or 8949/Schedule D) depending on your property type.
Important Note
Flock Homes does not provide tax, legal, or accounting advice. This information is for educational purposes only. Clients should consult their own tax, legal, and financial advisors before making any investment or tax-related decisions.
This program operates under IRS Code Sections 721 and 722, which govern partnership property contributions and interest exchanges.
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