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FIVE REASONS TO EXCHANGE: "INVESTORS CAN
MEET MANY OBJECTIVES UNDER IRC §1031"
Section 1031 tax deferred exchanges continue to increase in popularity as
more investors nationwide discover the wide range of investment objectives
that can be easily met through exchanging.
I. PRESERVATION OF EQUITY
A properly structured exchange provides real estate investors with the
opportunity to defer 100% of both Federal and State capital gain taxes. This
essentially equals an interest-free, no-term loan on taxes due until the
property is sold for cash! Most often, the capital gain taxes are deferred
indefinately because many investors continue to exchange from one property
to the next, dramatically increasing the value of their real estate
investments with each exchange!
II. LEVERAGE
Many investors exchange from a property where they have a high equity
position or one that is "free and clear" into a much more valuable property.
A larger property produces more cash flow and provides greater depreciation
benefits, which therefore increase an investors return on their investment.
III. DIVERSIFICATION
Exchangers have a number of opportunities for diversification through
exchanges. One option is to diversify into another geographic region such as
exchanging of one apartment builidng in Denver, Colorado for two additional
apartments - one in Los Angeles, California and the other in Dallas, Texas.
Another diversification alternative is acquiring a different property type
such as exchanging from several residential units to a small retail strip
center.
IV. MANAGEMENT RELIEF
Many investors accumulate several single family rentals over the years.
The on-going maintenance and management of what can be a far-reaching group
of properties can be lessened by exchanging these properties for one
property better suited to on-site maintance and management. Exchanging into
a single apartment complex with a resident manager is a good example of this
strategy.
V. ESTATE PLANNING
Often a number of family members inherit one large property and disagree
about what they want to do with it. Some want to continue holding the
investment and some desire to sell it immediately for cash. By exchanging
from one large property into several smaller properties, an investor can
designate that, after their death, each heir will receive a different
property which they can either hold or sell. Call the knowledgeable exchange
professionals at Asset Preservation for a complimentary consultation
regarding your specific investment objectives.
Back to Table of
Contents 1031 Exchange Information |
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Unless otherwise stated square footage and lot dimensions appearing herein are
derived from county records and may or may not be accurate.
If square footage is material to a transaction a survey or other measurement is
recommended. This information deemed reliable but not guaranteed. Current or
previous year’s taxes may not accurately forecast future property taxes.
Property taxes can increase from one year to the next for various reasons.
This page, and all contents, are Copyright © 2023 by Buy the Beach
Realty, Inc.
800 West Avenue, Miami Beach, FL 33139 USA
Licensed Florida Real Estate Broker
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