There are ways for your equity to work for you in real estate purchases. A 1031 Exchange affords you the opportunity to preserve your equity, keep the proceeds you would have set aside to pay taxes and instead deploy the funds to the purchase of new real estate with greater potential. Keep your equity working for you.

What is a 1031 Exchange?

A 1031 exchange allows you to defer capital gains taxes, thus freeing more capital for investment in the replacement property. In a 1031 tax deferred exchange type of transaction, you sell one property and defer the payment of capital gains taxes by acquiring a replacement property or properties and use the deferred taxes towards the purchase.

Advantages of a 1031 Exchange

There are many 1031 exchange benefits. Here are some of the most significant benefits:

1. Avoid/defer capital gains tax during a sale.
2. Build equity over time.
3. Trade up for higher-value properties.
4. Grow or diversify your portfolio.

1031 Exchange Requirements

The main requirements for a 1031 exchange are:

1. Must purchase another “like-kind” investment property.
2. Replacement property must be of equal or greater value.
3. Any proceeds not invested would be taxable.
4. Must be the same title holder and taxpayer.
5. Must identify new property within 45 days and close within 180 days.

Some form of tax-deferred exchange has been with us since 1921. Investors have been using it for decades in America to build equity and keep their funds working for them, whether for one property or many. Therefore, the process is old, however the logistics have been streamlined dramatically with what we now have with Section 1031. Most importantly, always consult your CPA for tax guidelines.

If interested, you need a good 1031 Exchange firm to guide you through the process and a good Real Estate Broker to guide you through the purchase of the property. Feel free to contact Leigh Buchan Harvey and/or Kyle Williams from Velocity 1031.

Leigh Buchan Harvey, Realtor
Phone: 206-730-1319
Email: lbharvey@windermere.com
Website: lbharvey-windermere.com

Kyle Williams, Sr. Vice President
Phone: 425-247-3307
Email: kyle@Velocity1031.com
Website: velocity1031.com