If you are looking for 1031 exchange properties for sale, the associates our Net Lease experts are ready to help you identify the right property for your investment. You have 45 days from when you first started the process of the exchange. In those 45 days you are required to identify the property you will be buying in the exchange. Our experts have worked with countless 1031 Exchange clients and will help you in the 1031 Exchange properties for sale process.
Understanding a 1031 Exchange
A 1031 exchange is commonplace in real estate investing. It can be highly beneficial for all parties involved and acts as a vehicle for owners and investors. A 1031 exchange is a type of tax deferred exchange, also known as a like-kind exchange. The process is a method of exchanging real estate according to certain stipulations which results in deferred capital gains. Owners of real estate have the opportunity to change or swap current real estate without acknowledging the capital gain, so the investment continues to be tax deferred. By taking advantage of 1031 exchange properties for sale, investors can also receive benefits over the outright purchase of a property.
Benefits of a 1031 Exchange
Before you look for 1031 exchange properties for sale in the net lease market, take time to consider the benefits:
- Tax deferrals – A 1031 exchange allows you to defer capital gains taxes.
- Improved purchasing power – You can reinvest 100% of the equity and avoid capital gains taxes.
- Potential for more income – A 1031 exchange enables the investor to reinvest in a property that may produce additional income.
- Management relief- Properties with excess management requirements can be replaced with a property that has little or no maintenance liability.
- Consolidation – Owners or investors can sell and consolidate equity on multiple properties into one.
- Estate management – Multiple 1031 exchanges can be executed over the course of an investor’s life, thereby deferring their taxes until death. The depreciated value of the property is then made equal to the current market value. Heirs can subsequently sell it without any capital gains liabilities.
Six Things to Understand About Deferring Taxes Through 1031 Exchange Properties for Sale
Before you choose to invest in 1031 exchange properties for sale, there are a few things to understand about the tax scenario. In general, it’s always a good idea to speak to financial advisors or lawyers before you begin the process. Avison Young’s net lease group can assist you with these needs.
- Not all real estate qualifies for a 1031 exchange.
- A property does not have to be exchanged for the same kind of property.
- An exchange can be delayed.
- If you choose to delay the exchange, a middleman is required to hold the equity on the sell and before closure on the replacement property.
- Cash remaining after the purchase of the property can be taxed as capital gains.
- You can do a 1031 exchange as often as you like.
When it comes to 1031 exchanges, there is a vast learning curve and several legal factors to consider which is why it’s advisable to work with a real estate firm like Avison Young. If you are looking for 1031 exchange properties for sale, contact our 1031 exchange experts here. We will work with you to find a hands-off investment by investing in a net lease property through your 1031 exchange.