What Is A 1031 Tax-Deferred Exchange?
A 1031 tax deferred exchange is one of the most powerful tools investors or owners of investment property can use to defer paying capital gains on the sale of an income property, while converting that property into a property of higher
and better use to the investor or owner. For instance, many people I speak with on a regular basis own a second home they're renting that has a significant asset value compared to the rental income it's currently generating. In many
cases, these investors could easily exchange their property for a multi-unit property that generates significantly more income right away and provides greater upside in the future as rents continue to rise.
There really is no downside to taking advantage of this incredible tax opportunity and many savvy investors utilize this tool all the time to upgrade buildings or to move their equity in properties into other properties that will perform better or where they can create better upside. For more information on 1031 exchanges, you should seek out an "exchange facilitator" to make sure you fully understand the process and tax implications. Although there are several ways you can do a 1031 tax-deferred exchange, by far the most common is the Delayed Exchange where you have to identify up to 3 replacement properties within 45 days of closing escrow on the property you're selling and then close on the replacement property within an additional 180 days.
Clients of mine have used Exchange Resources, Inc. many times in the past with excellent results. I've participated in a course provided by the owner, Phil, that was extremely insightful and valuable.
You can also contact our team to learn more about 1031 exchanges and how they can work for you.
