A Powerful Tax Solution For Real Estate Investors
As a real estate owner, you've worked hard to build equity in your real estate property.
When it comes time to harvest the value you've created, how much does the prospect of paying taxes on the sale discourage you from selling you property?
A 1031 Exchange is a transaction which permits a property owner to sell one real estate asset, and buy another "like-kind" real estate asset, usually without incurring immediate taxes on the capital gain or depreciation re-capture.
Like kind could be the following:
Single family rentals
Office/Commercial
Golf courses
Raw land
Some recreational properties |
Farms/Ranches
Motels/Hotels
Multi family rentals
Retail/Industrial
Leasehold interest of 30 years or more |
Benefits to a 1031 Exchange
1) Defer capital gains taxes on the sale of your property
2) Enjoying cash flow that is generally paid monthly as well as possibly sharing in the appreciation of the property when sold.
3) Continue to enjoy the many tax benefits from holding and financing a depreciable real estate asset
4) Eliminates day-to-day property management burdens
How To Get Started
The first step in initiating a 1031 Exchange is to talk with a Financial Advisor or a Qualified Intermediary specializing in 1031 property exchanges. These professionals can assist you with the information you need to know concerning required transactions, deadlines, and relevant IRS regulations.
What To Do Next
1) Put your desired real estate up for sale. Once you receive a contract contact a Qualified Intermediary to set up the exchange. Proceeds from the sale will go into an escrow account with your Qualified Intermediary.
2) Within 45 days of the transfer, identify your replacement properties with your Qualified Intermediary.
3) "Acquire" replacement property with 180 days of the final sale of the current property.
Important Reminders & Risks involved
- To Complete a 1031 Exchange, there are specific IRS rules that must be followed! Therefore, you should consult a Tax Advisor prior to engaging in a 1031 transaction.
- To fully defer all taxes realized from the sale of your property, the cost of the replacement property (when compared to the relinquished property) must be equal to or greater than the net sale price, have equal or greater debt and not have equal or greater equity.
- This is neither an offer to sell, nor a solicitation to buy any security.
- With any Real Estate Investment, returns and principal values fluctuate, and when sold, may be worth more or less than the original cost.
First Financial Equity Corporation does not provide legal or tax advice. Persons who wish to make tenant-in-common investments are encouraged to seek the advice of competent legal and tax advisors. The information provided on these web pages is for general information only and does not contain all the risks associated with a real estate investment of this nature. With any Real Estate Investment, returns and principal values fluctuate, and when sold, may be worth more or less than the original cost. This material does not constitute an offer to sell or a solicitation of an offer to buy any security. |
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