1031 Exchanges

A 1031 Exchange (Tax-Deferred Exchange) is one of the most powerful tax deferral strategies remaining to investors and an effective wealth building tool. Thanks to the Internal Revenue Code 1031 a properly structured exchange allows an investor to sell an investment property, acquire a new property, and potentially defer all capital gain taxes. Pursuant to IRC 1031, capital gain deferment requires the exchange of “like-kind” relinquished property for other “like-kind” replacement property. “Like-kind” or a qualified property is defined as a property owned either for productive use in a trade or business, or for rental or other investment purposes.  Numerous benefits and advantages are available to sellers of 1031 “like-kind” properties who, rather than sell and cash out their equities, purchase a replacement property or properties under IRC 1031. Some valuable benefits are as follows:

 

  • Exemption from reporting all or a portion of the profit on the sale
  • No recapture of any excess accelerated depreciation
  • Debt leverage and income yield can be increased by replacing property currently owned with a higher-priced and more productive property that can potentially appreciate in superior increments into the future
  • A “Fresh Start” on the allocation of basis between buildings and land, establishing new depreciation deductions which can be increased by assuming greater dept on higher priced replacement property creating potentially further tax shelters for the investor
  • A continuous investment, with no idle time when money is not invested in real estate (a lock on inflation)
  • The equities from several properties can be consolidated (by one owner or more) into a single more efficient and productive property
  • Management intensive properties can be sold and replaced with a more manageable property or properties

Newport Apartment group has built a strategic alliance with key professional intermediaries (1031 Accommodators), tax advisors, and legal advisors who have the sophistication and track records to assist in your 1031 Exchange. Our goal is to guide you, step by step, though the exchange process from the sale of your relinquished property and into your replacement property. To set up a consultation to review your portfolio and determine how your specific situation can capitalize on some of these key benefits listed above please call David Sanford at (949)306-9508.

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