What is a 1031 Exchange and how does it work? (WEBINAR)
- A 1031 exchange is a swap of properties that are held for business or investment purposes.
- The properties being exchanged must be considered like-kind in the eyes of the IRS for capital gains taxes to be deferred.
- If used correctly, there is no limit on how many times or how frequently you can do 1031 exchanges.
- The rules can apply to a former primary residence under very specific conditions.
A 1031 Exchange is an exchange of like-kind properties in the United States. Put simply, a property being sold is not subject to capital gains tax until it is eventually sold without reinvestment of the proceeds. Essentially, this allows not for the avoidance, but the deference of any taxable gains on the property that is first sold.
In a 1031 exchange, both properties must be held for business or investment purposes and must be located in the United States. Although they must be similar in nature, the quality of the properties is irrelevant. Corporations, partnerships, limited liability companies, and trusts are eligible tax-paying entities that can establish an exchange under Section 1031.
Who does Jason Hartman recommend as a 1031 Exchange specialist?
Today’s show is all about helping you grow your real estate portfolio
as tax free as possible. When you are ready to sell one property and
purchase other ones with the proceeds there’s no need to pay capital
gains taxes at that time when you have a vehicle like a 1031 exchange.
Join Jason Hartman and Dino Champagne, Los Angeles Division Manager
& VP at Asset Preservation Incorporated, as they discuss the
strategies, the complexities and the savings that 1031s can provide.
Key Takeaways:
[5:17] How a 1031 Exchange works
[7:51] Try and avoid a reverse exchange as best you can, because they can get real tricky and lenders aren’t fans of them
[9:48] The 45 and 180 day timeframe of a 1031 exchange
[12:37] The 3 different ways you identify properties in a 1031 exchange
[14:59] How much money can a 1031 exchange actually save you and your heirs? It’s pretty astounding
[20:18] 1031 exchange accomodators aren’t highly regulated, which has
led to some scams over the years. What questions do you need to ask
when you’re searching for one?
[24:19] Changes the new tax law has made on 1031 exchanges
[26:50] Are Opportunity Zones over-hyped?
[32:23] With Opportunity Zone investing being so new, vetting the sponsor of the deal is more important than ever
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