So WHAT IS 1031?

A structured 1031 Exchange is where an an investor sells a currently owned property, then reinvests the proceeds in a new property & defers all of the capital gain taxes.

IRC 1031 (a)(1) states:

"No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment."

If you want a better understanding of this, imagine that you have a $600,000 capital gain on a property sale and you incur a tax liability of somewhere in the $150,000 range (this is combines taxes, depreciation, state & federal cap. gains taxes, etc.) when you actually sell the property.

If you were to reinvest this money, you'd only have $450,000 to reinvest in property. A 7% yield would return $31,500.

But if you were to reinvest  as a 1031 exchange, you'd have the full $600,000 to buy with .  A 7% return there would yield $42,000 annually.  A difference of $10,500 in the first year.  After just 7 years, the difference would be over $250,000 earned.  For the same yield of just 7%!  Many 1031 properties offer higher yield opportunities than that.  How you can afford NOT to take advantage of this tax break?

These taxes are deferred until the you (the investor) dies or decides to do a non 1031 exchange sale.  1031 Exchanges are a great $$$ building opportunity.  And they are incredibly diverse.

 
   
 

In a 1031 tax deferred exchange, you are able to exchange your real current investment property for any other real property in the US or any of its possessions but only if the property is for investment purposes.

This includes:

  • Condos

  • Apartments

  • Retail buildings

  • Duplexes

  • Commercial property

  • Raw Land

  • Industrial Property

  • Single Family Dwellings

A steadfast rule is that you have 45 days to find the property you are interested in after making your sale.  And a total of 180 days to close the deal.  There are NO EXCEPTIONS to these time deadlines.

And there are 3 rules for identifying the property type:

  • The Three Property Rule - You may identify up to three properties of any value.

  • The 200% Rule - You may identify more than 3 properties, but their total fair market value cannot exceed 200% of the fair market value of the relinquished property.

  • The 95% Exception - If you identify properties in excess of both Rule 1 and Rule 2, then you must acquire 95% of the equity of all properties identified.

Call us today and let us talk about your situation specifically to help make this easy

1-321-443-6001 (Jeff)
1-321-258-6827 (Wade)
1-888-206-6040 (Toll Free)

4499 W. Hwy 192 - Kissimmee, FL  34746

Let us help you invest!


The experts at ComDev, LLC will be able to fully explain the investment opportunities out there that fit your budget and investment needs.

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