How a 1031 Exchange Can Benefit Big & Small Investors Alike

Many people have heard of 1031 exchanges but assume that they are only for the big time real estate investors. Not true! Section 1031 of the Internal Revenue Code applies to all United States taxpayers. In this article, we are going to talk about how a 1031 exchange can benefit both big and small investors alike!

How to Utilize Section 1031

Section 1031 of the IRC provides U.S. taxpayers the opportunity to defer their capital gains taxes when selling investment real estate. In order to do so, you must take all of your sales proceeds and reinvest them into a new replacement property of equal or greater equity, value, and debt. It’s important to note that the benefits of section 1031 only apply to real estate that’s used for investment or business purposes. Personal property is excluded from 1031 treatment.

When done correctly, you will be able to avoid a huge tax bill and instead put that money to use in a continued investment.

Section 1031 is Available to All Taxpayers!

Section 1031 of the Internal Revenue Code is available to all taxpayers! You don’t have to be a big time real estate investor to avail yourself of the benefits of a 1031 exchange. Our qualified intermediaries can walk you through every step of the exchange process and make sure you have all your bases covered when it comes time to close on your property. Contact us today to learn more about our 1031 exchange services and to see if you are a good candidate for like-kind exchange.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Are 1031 Exchanges only for Big Investors?

Are 1031 exchanges only for big time investors that have lots and lots of net proceeds? The quick answer to this question is no. In this article, we will examine a few of the ways in which any investor – large or small – can benefit from a 1031 exchange.

Small Investors & 1031s

It’s a common myth that 1031 exchanges are only for the largest investors. But small mom-and-pop investors can avail themselves of the same tax deferral that the big boys do.

Whether you're selling a $43,000 single family rental in Akron Ohio or selling the Trump Plaza in New York City the same principle applies. If you want to take your hard-earned equity and redeploy it into another replacement property that's like kind so that you can use that money to compound and build your own wealth, you can do so. Even little guys can avail themselves of substantial tax savings and grow and compound their wealth until they're no longer little guys and are now successful real estate entrepreneurs.

Determining Your Gain

Your gain is determined by the difference between your current adjusted basis and the net sale price (amount realized), so even if you do not receive very much cash proceeds, it can still make good sense to set-up your sale as a 1031 exchange.  If you estimated a combined state and federal rate of 33%, even if you can defer the recognition of $50,000.00 of gain, that may result in a tax savings of $16,500.00.  So, even small investors can save BIG with IRC Section 1031 Like-Kind Exchanges.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges and investing in real estate, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2016 Copyright Jeffrey R. Peterson All Rights Reserved