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 |
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.