Benefits of 1031
The sale of a business or investment asset, whether it is real estate or capital equipment, can create a large tax liability. A properly structured tax deferred exchange under Internal Revenue Code §1031, however, allows businesses and individuals to defer the recognition of the capital gains or other taxes associated with the sale of most business or investment assets, as long as new assets are purchased to replace the existing assets. In general, most tax deferred exchanges are structured either as a real property or a personal property exchange. Real property exchanges include only interests in real property, while personal property exchanges encompass virtually all other types of property.
Exchanging from a larger building to several smaller properties to improve liquidity or to diversify ownership among several persons.
Consolidate or Leverage
Exchange from several smaller properties to a single larger building to sonsolidate ownership benefits.
When the investor pays taxes on a sale, he/she will not have access to those funds again. This increases the risk of defaulting on an investment – especially leveraged investments.
Change Property Types
Exchanging from commercial property which can’t be readily refinanced, such as land, to improved property which will support a new loan. This makes it possible to obtain cash, and trading from non-productive land to improved property can also create improved cash flow.
By using the exchange process, you can move your real estate investment from one geographic location to another. Often investors want to do this when relocationg due to a job transfer or retirement.
Eliminate Or Create Joint Ownership
Exchanging to diversify ownership among several persons.
Improve Cash Flow
By using 1031 Partners Exchnage Services, investors can transfer their equity into an investment with a higher return and delay the payment of taxes on any appreciation.
Delay RecaptureExit From Real Estate
A structured sale enables investors to transfer wealth out of a management intensive, uncertain, or potentially risky real estate asset and into a reliable, stable asset with a predicatable cash flow and no management requirements.