1031 Tax Deferred Exchanges


Regency Commercial Realty is a leader in the field of 1031 Exchanges. They have cultivated and curated a network of owners and investors of all types of properties, allowing them to help bring properties and exchange buyers together. More info on 1031 Exchanges:


STRATEGIC PORTFOLIO ENHANCEMENT


Investment property owners often deal with the challenge of how to leverage existing equity in their income-producing properties, as well as increase their return on equity — but defer capital gains taxes. Regency can help private investors upgrade or reposition their real estate holdings through this process.  



1031 EXCHANGE — HOW IT BENEFITS YOU


Savvy investors can utilize the 1031 Provision in the IRS Code (also known as a Starker Exchange) to facilitate a “trade up” to a larger, higher quality, or better suited property, but also defer capital gains taxes. Always attain the guidance of a tax professional or attorney. Whatever your goals, whether to move to a bigger, better property, or to find a property that requires less time management and involvement, a 1031 Exchange can be a great vehicle for your investment strategies.


THE BASICS 

There are 3 types of exchanges:

  • Simultaneous
  • Reverse
  • Deferred


About 95% of exchanges are of the “Deferred” type. When the investor sells an investment property, the tax code allows that property seller 45 days from close of escrow of the relinquished property to find up to 3 replacement properties, and an extra 135 additional days to close the escrow on at least one of those 3 properties. That investor/seller has to contract with a third neutral party, or qualified intermediary/accommodator to manage the funds from the sale of their property, as well as to facilitate the purchase of the replacement property/properties on behalf of that seller. This process, when successfully completed, allows the seller of the property to delay or defer the capital gains payment, and recapture the depreciation tax benefit. However, the seller must follow the process, because if you deviate from the process explained above, there may be tax consequences or severe cost penalties.


KNOW THE LAWS AND REGULATIONS AND MAKE SOUND DECISIONS

Every seller looking to complete a 1031 Exchange is different and has unique needs and goals. They should evaluate those needs and goals, but an important step in the process is to have a qualified real estate agent or broker evaluate your property and determine the market value. Then they should discuss the tax alternatives and ramifications with your personal tax advisor. Working in concert, these professionals can help you make the right decisions, whether that might mean not going through the 1031 Exchange process and  just selling the property, taking the cash and paying the capital gains taxes (If interest rates remain historically low, this may be the right call, for instance). But facilitating an exchange might be the way to unlock built up equity and allow you to expand your portfolio and build or generate greater wealth. Bottom line, a wise investor relies on the right professionals to know his or her options and avoid costly mistakes or bad decisions.



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