Why Just Sell Investment Property When You Can Exchange It With A 1031 Exchange? |
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| By Trisha Coppley |
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| keywords: 1031 exchange 1031 tax exchange 1031 exchanges deferred exchanges tax deferred like kind exchange 1031 1031 real estate exchange | ||||
| As an investor, you must be aware that dollar that you have
working for you is making you money, and, conversely, that
every dollar not working for you is a missed chance to
compound your wealth. When it is time to put your property
up for sale, you have two options. The first way in which
you can cash in on a piece of property's appreciated value
is to make a outright sale and recognize the profits as a
gain. This means that you will have to pay capital gains
taxes on the sale proceeds. Every time you had money over to
the U.S. government in the form of taxes, you are throwing
away potential profits. Your second and more lucrative choice is to conduct a 1031 exchange. A great way to keep more of your investment funds making you more money is to conduct an exchange rather than making an outright sale on a property. A 1031 exchange has a provision of non-recognition; this means that you are not to pay the taxes immediately following your sale; in fact, you can defer the taxes indefinitely, while your wealth is compounded by the extra income produced by investing your tax deferment. To demonstrate, imagine that you own some small investment properties, like duplexes, whose values have appreciated over time. At this point, your inclination may be to make an outright sale and reap the benefits of your investments. But a wise investor with an eye to the future might choose to conduct an exchange and put the money gained from these properties towards buying another, larger piece of property, which will, itself go on to increase in value over time, meanwhile continuing to make you more money. The best part of all is that the extra funds available to you as a result of deferring capital gains taxes will work to heighten your capacity to leverage for further loans, maximizing your potential profits. 1031 exchanges aren't just for buildings and land, either. You can conduct an exchange on any real estate held for investment in your business or trade, as well as some types of personal property, from cranes or backhoes to airplanes or classic cars. In fact, 1031 exchanges are particularly advantageous for those who have invested in collectibles or antiques like collector cars, in light greater capital gains liability on the sale of these items. You cannot, however, exchange stockor interest gained from an REIT. Next time you find yourself in the position to sell an appreciated piece of real estate or other type of investment, pause for a moment to consider the potential dividends you could gain if you were to exchange. If you choose to make a 1031 exchange rather than selling your property up front, you can compound your wealth over time and come out on top . |
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| keywords: 1031 exchange 1031 tax exchange 1031 exchanges deferred exchanges tax deferred like kind exchange 1031 1031 real estate exchange | ||||
| Article Source: http://interpret.zar.vg | ||||
| About The Author Section 1031 Exchange (Of The IRC) States That Property Investors Can Use A 1031 Property Exchange When Selling And Buying Like Kind Investment Property. To Find Out More Visit www.Top1031Exchange.com |
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