BiggerPockets Daily 1234 - Here’s the “Lazy 1031 Exchange” and How To Do It by G. Brian Davis
Mar 1, 2024
Explore the Lazy 1031 Exchange strategy in real estate investing, a passive approach to defer capital gains taxes. Learn about strategies for accelerated depreciation and tax deferral in real estate investments, including reclassifying assets and utilizing bonus depreciation benefits. Simplified real estate investing through the Lazy 1031 Exchange strategy emphasizes simplicity and hassle-free property investment.
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1031 Exchange Basics
- Use a 1031 exchange to defer capital gains taxes when selling a rental property and buying another.
- Be aware of strict timelines, the need for a qualified intermediary, and higher costs, making them more practical for active investments.
Lazy 1031 Exchange Explained
- The "lazy 1031 exchange" uses passive real estate syndication investments to offset capital gains.
- The upfront paper losses from these investments can negate profits from other property sales, avoiding capital gains taxes.
Accelerated Depreciation
- Utilize accelerated depreciation through cost segregation studies and bonus depreciation.
- Reclassify building parts as personal property to depreciate faster, yielding larger paper losses.