Probably the single best method for upgrading your property in a tax deferred way. The 1031 concept may seem like a very complex situation when reading the IRS publication.
To simplify matters, all you need to do is follow the two rules below and find a good, qualified "intermediary" to handle the exchange and timely identification of the property in interest.
The total purchase price of the replacement "like kind" property must be equal to, or greater than the total net sales price of the relinquished, real estate, property.
All the equity received from the sale, of the relinquished real estate property, must be used to acquire the replacement, "like kind" property.
Don't overlook the power of like-kind exchanges. This is a great way for new investors to grow their portfolio from small 1/2 family houses to multi-family or larger investment properties.
I have successfully completed this with a single family (investment) house to an exchange to a 3 family property, with me as the intermediary and my client as the owner. It is a time consuming process, but when done right, it can increase your buying power significantly by using the amount of money due for taxes in your purchase power.
As a new investor to this concept, it is worth taking the time to understand this concept and take advantage of it.
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