Besides tax deferral, a vital component of a 1031 exchange is identifying and buying the right replacement property. 1031 Property list that qualifies for a 1031 exchange includes apartments, land office, retail, residential rentals, hotels, self-storage, senior care facilities, restaurants, medical, industrial daycare and educational, retail, and other investment properties and businesses. For instance, you can now sell land and procure an office building, sell a four-plex and acquire land for development, or sell a warehouse and purchase a single-tenant retail property; all of them are considered “like-kind” 1031 exchange properties. 1031 Property List With the financial recession of 2007-2008, the number of exchanges drastically reduced and most TIC sponsors either shut down their business or turned to some other projects. With the boom of 1031 exchanges in recent years, the demand for security, diversification, and passive income has inspired real estate companies to provide replacement property to 1031 exchangers. Instead of using the pre-crash TIC form of ownership, sponsors have selected the Delaware Statutory Trust (DST) structure, which offers similar benefits to TICs. DST replacement property has various benefits to consider, but only accredited investors (high net worth or annual income) have access to DSTs. Several exchangers sell management-intensive properties or land in hopes of secure monthly income without the hassles of maintenance, tenant turnover, day to day responsibilities, or upkeep. You can invest your 1031 exchange proceeds in 3 ways to achieve passivity in real estate ownership: properties with a Tenants-in-Common (TIC) properties, Net Lease (NNN), and properties in a Delaware Statutory Trust (DST). 1031xchange.com has been helping exchangers looking for passive income for more than 15 years and has access to what we can proudly say is the more comprehensive selection of 1031 exchange properties. What is a 1031 Exchange? A 1031 tax-deferred exchange enables investors to reinvest the profits from the trade of investment property in one or more replacement properties without getting immediate federal (and most state) capital gains taxes on the appreciated value. When the process of sale and purchase meet the 1031 exchange standards, taxes are deferred until the newly procured property is sold. This deferral policy can be replicated through any number of exchanges until the tax liability crosses into the individual’s estate upon death. If you go for a 1031 Exchange in Alabama, you should be aware of the basics. IRC Section 1031 enables an accurately structured exchange allowing any investor to trade property and reinvest the profits in a brand-new property and to put off all capital gain taxes. IRC Section 1031 (a)(1) states: “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like-kind which is to be held either for productive use in a trade or business or for investment.” Individual tax situations can differ and can be quite complex. It is advisable to seek guidance from a tax professional in a specific situation. If you are searching for a 1031 property list, call 1031xchange at 1-888-993-2835 or drop an email: [email protected]
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Buying a real estate property at a discounted price can make any investor happy. That's why the number of investors looking for 1031 exchange property for sale has increased. As properties put on sale are likely to cost less than premium properties, more and more 1031 investors look for such properties that can be purchased at a discounted price.
1031 Exchange Explained - Section 1031 of IRC or a 1031 exchange or a tax-deferred exchange of property is an arrangement that allows investors to defer capital gains tax on exchanging an investment property for another like-kind property. Properties involved in 1031 exchanges must be held for use in trade, business or for investment purposes. For example, an investment property can be exchanged for another using a 1031 exchange. Only personal properties don't qualify for a 1031 exchange. One of the 1031 exchange rules requires investors to involve a Qualified Intermediary in their respective 1031 exchanges. Similarly, there are many other rules that a pursuant of 1031 exchange must adhere to. 1031 Exchange Property Rules - A 1031 exchange investor can identify any number of replacement properties using any of the following rules -
The south-eastern state of US, Alabama, is known for innumerable reasons. Famous sights like Rosa Park's Museum and the church of Martin Luther King Jr. have always been a centre of attraction for anyone landing on the Alabama soil for the first time. The capital city Montgomery itself is popular among the natives as well as the outsiders for its beautiful landscape. However, the state of Alabama isn't only known for its architectural excellence and profound history, it is also considered as one of the best markets for real estate investors, especially for 1031 investors. To understand what 1031 exchange Alabama market has for investors, we reached out to Scott Davis, an experienced 1031 investor presently active in Alabama. You were born in Santa Ana, why you moved to Alabama? What made you change your mind? Frankly, it was Alabama's beautiful landscape that dragged me here. I used to visit my maternal uncle in Montgomery during school vacations. He would offer me a drive in his Fiat every weekend, and we would visit all the famous spots that Alabama is known for. I found all of them intriguing. That was the time when I had decided I would move to this Orange County city had I given any opportunity. I was 16 then. What I didn't know was that it would take me another 14 years to reach here. Your investment was thriving in Santa Ana yet you chose to do a 1031 exchange and shifted your base to Montgomery? Any specific reasons? I had a couple of investment properties in California that were generating considerable revenues. However, the maintenance expense was too high. I had to spend a significant part of my profit in maintaining both properties. Initially, it wasn't a big deal as the profit was good even after deduction. However, the operating expenses associated with both properties had begun to soar gradually and the profit was diminishing at the same pace. When the pressure finally began to pile on, my financial advisor and an old friend, Joshua, suggested me to sell out both properties and reinvest the proceeds in some other income-producing assets. He had introduced me to Section 1031 of IRC or what you call a to connect 1031 exchange, and how it could provide relief from property management. That was enough for me to take the final call. I had to sell my properties, I had to come to Alabama. Being a 1031 investor, how did you find Alabama different from a bigger state like California? 1031 exchange Alabama market has much to offer to investors of all stature. Popular states like California or Texas are known for high-quality institutional-grade properties that have high prices as well. Small investors may not find a place in these states. This is a harsh reality. However, Alabama is different. Not only the giants of the real estate market but even the small investors get a lot of buying options in Alabama. Things like low-income tax rate, strong single-family rental housing market, a massive flow of students and job seekers, low crime rate, and beautiful landscape make Alabama a perfect place for real estate investors as well as for tenants. You may find some of these qualities in bigger states but not all. What would be your biggest advice to someone who is looking to do a 1031 exchange in Alabama? If you want to do it, it's the right time. The best thing about the Alabama real estate market is that it's booming every day. Property's value is skyrocketing year by year. If there is any right time to invest in real estate in Alabama, it's today. But before you do it, don't forget to have a word with your financial advisor or a 1031 expert. I would like to say this only. |
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October 2019
Commercial Real Estate |