THE POWERFUL 1031 EXCHANGE – AND A TRUSTED PARTNER FOR YOU
Most sellers usually have not done a 1031 exchange in the past and don’t understand the rules. Their tax professional often won’t be notified of the sale prior to closing. For these reasons the responsibility of simply asking the question about whether a 1031 makes sense falls on the shoulders of the listing broker. This does not mean the broker needs to be confident in all the 1031 rules. However, it does mean the broker should refer the seller to a competent 1031 facilitator for guidance – that is part of your amazing service to the investor. Your Facilitator needs to be available to answer you and your investor’s questions on the fly and at no charge. Reach me directly on my cell phone, as I’m the principal/owner at Exchange Trust, 425-697-0479.
It usually makes much more sense for a real estate investor to 1031 their sale than to just pay the taxes. The process is so simple, and the accumulated depreciation and the last few years of good appreciation will create a hefty tax bill to the state and IRS. Find a Facilitator, ensure the funds are safe, and the fee is usually less than 3% of what the taxes would have been.
State taxes are usually the gain times 10% and federal capital gains tax 20% plus 3% medicare tax, and the gain is larger because of all the years of depreciation taken (because seller has a good CPA) and because we have had so many back-to-back years of appreciation. And the accumulated depreciation is actually taxed at a higher rate.
There is no limit to the number of times that gain can be deferred into repeat sales and repurchases, and there are no time limits or managers that have to be used or geographic areas as there are with Opportunity Zones and DST investments. The 1031 exchange is still king. Affordable, time tested, and safe.