1031 Exchange

Defer Capital Gains Tax On Reinvestment

The most widely recognized type of 1031 Exchange is utilized for real estate, likely because of the expansive definition of what is considered “like-kind” for Real Estate Exchanges. Under this, any U.S. real estate property held by the client for productive use in a business or trade, or investment can be exchanged for any “like-kind” property, regardless of the grade or quality.

Real Estate Exchange Example

An institutional investor exchanges an apartments complex valued at $24,750,000 with no debt in New Jersey for a $30,000,000 office building in Texas for a tax savings of over $3 million that can be used to purchase substantially more replacement property.

SALE EXCHANGE
FMV-Apartment Complex $24,750,000 $24,750,000
Basis $15,000,000 $15,000,000
Gain Recognized $9,750,000 -0-
Tax $3,412,500 -0-
Tax Deferred Savings -0 $3,412,500
Cash available for Reinvestment $21,337,500 $24,750,000

 

For most 1031 Real Estate Exchanges, the combination of appreciation in value and the depreciation amount is taken over the period of time that was owned by the client results in a taxable gain. Numerous investors like to see what kind of tax saving funds they can benefit from the sale of their investment property.

1031 Exchange Benefits

  • Defer Tax

Save capital gains tax on your next property sale by signing up for a 1031 exchange agreement. 

  • Equity Growth

Acquire better-performing assets situated at prime locations. Enjoy increased cash flow over a period of time. 

  • Property Appreciation

Hold onto your investment property to let it mature and rise in value. Relax & watch your investment growing. 

  • No Landlord Responsibility

Get rid of untimely payment reminders and the burden of tracking property bills. Let your tenant bear operating expenses. 

  • Portfolio Diversification

Invest your sale proceeds in multiple investment properties and diversify your portfolio—own assets of different grades. 

  • Build For Heirs

You can start today and build wealth and assets for your heirs. Provide financial security to your family’s younger generation.

 

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