In a 1031 exchange, if you want to maximize your tax deferral you want to ensure that you’re not cashing out. So how do you not cash out in a 1031 exchange? That generally means you want to buy a replacement property of equal or greater value so you’re continuing your investment into a lateral or greater valued property. More importantly, if you’re not cashing out, you want to take all of your equity or net proceeds and redeploy that cash into the replacement property. Think about the cash that comes from the sale of that relinquished property as radioactive material. Don’t touch it! Instead, bury it in the replacement property in order to maximize your tax deferral.
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.
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