1031 Exchange – What is that?
This past week on “The Real Estate Investing Hour” we had the privilege of having Robbie Hewitt with Vesta Strategies join us on the radio to explain about 1031 Exchanges, what they are, how they can benefit you, and what rules you need to follow.
Some of the benefits of a 1031 Exchange that we talked about were:
Tax Savings: A 1031 exchange allows you to exchange your property for another and defer the payment of federal and state capital gains taxes. This basically allows you to reinvest the taxes you owe as an interest-free, no-term loan from the government.
Income: If you exchange from a non-producing or low producing property into an income producing property.
Leverage: The 1031 exchange helps build wealth more rapidly by allowing you to use all of your equity rather than losing a portion through taxes.
Diversification: A 1031 exchange opens doors for diversification. One can achieve geographical diversity or diversification by acquiring a different property type such as exchanging a single family residential unit for a commercial property.
Management Relief: Many investors often start investing through purchasing single family residences. As a result, they accumulate several smaller properties and may find themselves in a management-intensive and time consuming situation. The 1031 exchange provides a solution to this by allowing you to exchange these smaller properties for one larger property.
It was a great show and provided a lot of insight for our listeners on how they may be able to leverage their existing inventory into bigger deals. As we shared, there has never been a better time to get involved in rental real estate.
Tune in next week to www.NewsTalkRadio1160.com Saturday 10-11AM.
Anne Lackey
