Is a 1031 Exchange Right For You?
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A 1031 Tax-Deferred Exchange is an investment strategy that should be considered by all Phoenix Real Estate Investors who are acquiring, replacing and/or relinquishing Phoenix real estate investment properties.
None. 1031 Tax-Deferred Exchanges are also commonly known as Starker Exchanges, named after a 1979 court decision. In fact, these types of real estate exchanges are also known as Delayed Exchange, Like-Kind Exchange, 1031 Exchange, Section 1031 Exchange, Tax-Free Exchange, Nontaxable Exchange, and Real Property Exchange. Despite the many names, these terms all refer to a tax-deferred exchange. What are the advantages of a tax-free exchange? The primary advantage of a tax-deferred exchange is that you, as a taxpayer, may dispose of property without incurring any immediate tax liability. This allows you to keep the earning power of the deferred tax dollars working for him or her in another investment. In effect, this money can be considered an interest-free loan from the IRS! Before deciding whether or not to engage in an exchange, you need to carefully analyze all of your options. A decision should NOT be based solely on the tax consequences of the transaction. Rather, business considerations should play the dominant role in the decision. Such business decisions may include:
The purpose of this section is to bring attention to the opportunities available in engaging in a tax?deferred exchange as an investment strategy. The application of Section 1031 to a particular transaction or property can only be determined after careful study of your own particular facts and circumstances, and analysis by your tax advisor, attorney, real estate agent and intermediary. These exchanges are sometimes called tax?free exchanges because the exchange transaction itself is not taxed. The IRS´s regulations make exchanging easy, inexpensive and safe. Successfully managing a Foreclosure or Short Sale with a 1031 Reverse Exchange A foreclosure or short sale may result in taxes on gain that must be recognized. Real estate investors are using creative exchange strategies including "safe harbor" reverse exchanges, in these situations and using tax deferred dollars to purchase a better performing replacement property. Click here to learn more about exchange possibilities in a foreclosure. Other helpful topics are: Tips for Buying Rental Property, Is your LLC working for you and providing the protection you expect, How to make money investing in real estate, How you can buy and manage real estate within your IRA to build a bigger retirement nest egg and When to sell and upgrade your investment properties. A 1031 Tax-Deferred Exchange is an investment strategy that should be considered by anyone who owns Phoenix investment real estate. Contact me to review Phoenix real estate ownership opportunities to see if it's right for you. Contact me to help you sort through this real estate ownership opportunity to see if it's right for you. My Phoenix Home Buyer Guide has other helpful buyer tips and lists additional resources available to assist you with your home purchase and my Phoenix Home Sales Guide is designed to aid the Seller in maximizing net gain upon sale.
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