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1031 Tax Free Strategies
 | | Dave Ownens |
"How would you like to upgrade to a new condominium for free?"
Recently, many of the transactions on the Islands have involved seasoned Sanibel investors that have had a property for many years. Most of these investors decided it was time to upgrade via a 1031 exchange. The transactions were performed by a seller that wanted to upgrade from a two bedroom to a three bedroom unit, and most were able to do it without any out of pocket cost.
One transaction involved the sale of a piece of Sanibel land for approximately $300,000 with the proceeds rolled into a cash flow property. The seller was an Illinois resident that saved over $50,000 in taxes. They bought the property in the early 1980s for $50,000. One of the most unique tax savings tools still available is a 1031 tax exchange. Doing 1031 exchange can be easy with a little planning. One the most common misconceptions is that you can do a 1031 on your personal residence. 1031 Real Estate Exchanges are designed for your business or investment real estate. There are special rules for vacation rentals. Some of the other rules involved are that you must reinvest all the profits and proceeds to defer all the taxes due. These taxes include capital gains, recapture tax and state income tax. Also, you must use a Qualified Intermediary, or 1031 company, to help facilitate. The exchange must be set up before closing on the relinquished property. All the proceeds need to be held in escrow for the Exchangor during the exchange. Finally, there are some timing rules to be aware of. The Exchangor must identify their replacement property within 45 days of closing on the sale of the relinquished property, and they must close on the replacement property with 180 days. If you have identified replacement property, you can close immediately.
Are you are thinking about selling your 2 bedroom investment that is one building from the Gulf? Better yet, picture yourself overlooking the Gulf in a three bedroom rentable condo. With a good realtor and a 1031 exchange, this can happen.
If you would like more information to see if your property qualifies for a 1031 exchange, please feel free to: Call Dave Owens, CPA, CES at 239-333-1031 x155 or Email Dave at owens@1031company.com Visit: http://www.1031company.com THANKS FOR THE INFO DAVE!
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