INVESTORS CAN MEET MANY OBJECTIVES UNDER IRC 1031
Newsletter compliments of Asset
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 indefinitely because many investors continue to
exchange from one property to the next, dramatically increasing the
value of their real estate investments with each exchange!
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.
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 building 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 maintenance 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.