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Why
do a 1031 Exchange...?
1031
is a section of
the tax code that allows you to sell your investment
property (almost any property other than your personal
residence), buy a new investment property and defer
all of the capital gains taxes from the old property
to the new one.
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Jim
Sides is a 1031 consultant with the 1031Exchange
Experts, LLC.
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This does three things for you:
1) you don't have
to turn over to the government upwards of a third of
everything you made on the property;
2) you now have all
that extra money to spend on the new (replacement)
property; and,
3) it may help you
avoid the dreaded Alternative Minimum Tax (AMT). In
short, its way of preserving your working capital as
you build your real estate empire.
Here's an example: Let's say you have
a rental house you have owned for several years. It's
gone nicely up in value and the depreciation write-off
has given you good cash flow. It's been a good investment,
but what you'd really like is a condo at a ski resort.
If you just sold the rental house to buy the condo
without doing a 1031 exchange, your tax bite could
be huge (25% for depreciation, 15% for federal capital
gains, 0-11% for state capital gains, and then there's
that dreaded AMT). If you want to know what the taxes
might be in your situation, try our 1031
tax calculator.
If, you did a 1031 exchange instead
of just selling the rental house outright, all of those
taxes you would have owed would be transferred (deferred)
over to the condo. And all of the money you would have
paid to the government is now available to buy a better
condo.
Of course, there are rules involved.
For a quick review of them, see the Six
Things You Need to Know about §1031. If you're
seriously contemplating doing an exchange and want
to talk with an expert about your particular situation,
give The Experts a call, nationwide toll-free, at 866-694-0204.
We're available around the clock, 24/7.
But enough about us.
What can we do for you?
Nationwide, toll-free: 866-694-0204
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