Inland’s Kristin Orlando Counsels on Tax Compliance

As VP and associate counsel with the Inland Real Estate Group of Companies, Kristin Orlando is an integral part of the process of bringing investment products to potential investors. That’s especially true with offerings from Inland Private Capital Corporation (IPC).

For IPC in particular, one of the main drivers is Section 1031 of the Tax Code, which enables an investor to take proceeds from the sale of an investment property and invest in like-kind real estate and defer capital gains taxes. “One of the ways that you can do that is to invest in a Delaware Statutory Trust, which is a big part of the Inland Private Capital platform,” said Orlando.

Before a DST program comes to market, the legal team works with the business team as well as tax counsel, “to make sure that program is structured in a way that’s compliant and meets all the regulations under the tax code and IRS guidance. That’s one of the biggest pieces of the compliance and regulatory scheme at Inland Private Capital.”

There are others as well. For example, IPC offers programs structured through the Qualified Opportunity Zone program, which was enacted by Congress as part of the Tax Cuts and Jobs Act of 2017. The QOZ program gives investors a different way to defer capital gains taxes by investing in an Opportunity Zone and a development project located in one.

“Again, these programs, because they are under IRS purview, have to be structured to meet all the right regulations,” said Orlando. “So that’s where legal comes in. We work with the business team to set these programs up, structure them, and try to innovate and come up with a program that gives investors different opportunities.”

Along with shaping programs based on the regulations already in place, Orlando remains on the lookout for possible changes in the regulatory regime. “It is an election year and we may be facing another change in Congress,” she said. “Every time there is a change in administration, we’re carefully watching to see if there will be any changes on the tax side.”

An area of particular focus is the potential for changes to the provisions of Section 1031—which, under the Biden administration, was at one time threatened with being scrapped as a vehicle for real estate investors. “We’re also watching to see if there will be any changes in the regulations around Qualified Opportunity Zones,” said Orlando. “Currently the tax deferral period ends in 2026. We’ve been waiting to see if there’s any extension or other changes there. That’s something we’ll continue paying attention to.”

Regulatory changes aside, the legal and business teams focus on “paying attention to market dynamics, coming up with programs that may ride out those different cycles and working with different asset types,” Orlando concluded. “Right now, Inland Private Capital is putting a lot of focus on self-storage, medical office and student housing, because the team sees those as areas of real estate that are more recession-resilient and demographically driven. So, they have really adapted to changing market cycles in the past couple of years.”

Please see Inland Private Capital Blazes a Trail in Tax-Oriented CRE Investing, Inland Sees Brighter Days Ahead for CRE, Behind the Deal: Inland’s Majority Stake in Devon Self-Storage and Inland Execs Discuss Self-Storage, Student Housing, Senior Living for additional in-depth coverage of Inland Private Capital Corporation.