You’re a Real Estate Investor Considering 1031 Exchanges to Defer Tax on Gain
You own commercial real estate with all of its rights and responsibilities. But you want to create income without having to work; that’s retirement. Some tactics that may maximize your return are: get out of the market as close to the top of the cycle as you can, defer taxes on capital gains, redeploy gains through a IRC §1031 like-kind exchange that provides passive income from a professionally managed property as well as diversification of your portfolio.
A real estate market cycle lasts about 10-12 years. As an example, in the Greater Seattle area, we are at or near the top of the cycle. Consider the cycle characteristics: seller’s market, demand, rising prices. Your risk tolerance, time horizon, and opportunities factor into a decision to sell. As a commercial real estate professional in Seattle for over 30 years, I recognize that now is at or near the top of our cycle. If you are considering selling, it may be time.
Capital Gains Tax Deferral with 1031 Exchanges
You are re-evaluating how real estate fits into your portfolio and you know if you don’t take advantage of the IRC §1031 like-kind exchange, a big tax bill may be due. But how do you find the same kind of property with the same level of debt to equity? And, how do you diversify if you have to buy the same kind of property?
A Viable Alternative, the DST
A Delaware Statutory Trust, “DST” offers opportunities to keep your gains and diversify real estate holdings. A DST is one alternative for 1031 replacement property for accredited investors seeking to defer capital gains taxes through the use of a section 1031 exchange. IREXA has access to a national inventory of 1031 Exchange, DST, and TIC investments. Download your free list of 1031 DST Exchange Properties.
In a DST, investor owns a fractional interest in a large, institution quality, professionally managed commercial property such as retail, housing, and industrial properties in many geographical locations. The DST may provide cash flow income, tax benefits, and appreciation of the property.
A DST allows you to redeploy your money. You keep it working for you. It allows real estate investors to employ the §1031 exchange thereby paying capital gains taxes at a more opportune time.
Complexity is the enemy of execution: inertia, decision fatigue, and less complicated alternatives. This is why building a relationship with a proven, trusted financial advisor who can walk you through your investment options is so important. An experienced reliable professional will find the most tax-efficient strategies to help you keep more of what you make to reach your financial goals.