Short Term Rental Riches 35. Quite Possibly the BEST Tax Break Ever (1031 Exchange)
Jul 14, 2020
Discover the power of the 1031 Exchange in real estate investing! This strategy allows investors to swap properties without paying capital gains taxes, unlocking incredible wealth-building potential. Learn about key rules, the importance of intermediaries, and how to identify properties for exchange. Can you buy multiple properties at once? What if you don't use all the funds? Dive into the details, including the concept of a Reverse 1031 exchange, and hear personal success stories from past exchanges. This is a must-know tool for savvy investors!
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Power of 1031 Exchange
- A 1031 Exchange lets real estate investors defer paying capital gains tax by swapping one investment property for another like-kind property.
- This deferral can continue indefinitely across multiple exchanges, creating substantial wealth-building potential.
Plan Before Selling Property
- Identify potential replacement properties before selling your current property to avoid a rushed, unfavorable purchase.
- You have 45 days after closing your sale to identify up to three replacement properties in writing.
Use Intermediary and Meet Deadlines
- Use a 1031 Exchange intermediary to hold sale proceeds and guide you through the transaction process.
- You have 180 days from your sale closing to close on your replacement property to comply with IRS rules.