1031 Exchange – San Diego
We are an established industry leader in facilitating 1031 exchange transactions. Our experienced team has a proven track-record of guiding clients successfully through the delicate and nuanced 1031 exchange transaction process.
To review your options or for a list of 1031 exchange properties cal us at: (858) 952-1031 or Click here
WHAT IS A 1031 EXCHANGE?
An exchange is rarely a swap of properties between two parties. 1031 Exchanges are not really exchanges in the context of a two-party barter.
A properly structured 1031 ‘LIKE-KIND’ EXCHANGE allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes. IRS Section 1031 (a)(1) states:
“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.“
• Exchange smaller apartment building into a larger apartment complex
• Exchange an apartment building into a net-leased or other passive / hands-free-type investment – MORE INFO
• Exchange an apartment building into a ‘Fractional / Co-ownership-type investment ( ie: Delaware Statutory Trust (DST) – MORE INFO )
TYPES OF 1031 EXCHANGES
• Delayed / Forward (most common)
• Improvement Exchange
BENEFITS OF A 1031 EXCHANGE ?
Leverage – Through property appreciation and funds saved by deferring capital gains, investors are able to have increased funds available for the purchase of a larger property.
Diversification – Investors can expand their portfolio by purchasing a variety of different product-types (retail, office, net-leased) often times purchasing multiple properties in several markets throughout the country.
Consolidation – Investors can sell smaller properties and purchase one larger property to maximize economies of scale benefits along with minimizing management responsibilities.
Increase Cash Flow – Investors can sell a property that is producing little or no income (raw land or smaller income property) and purchase a property (s) that allow for greater cash flow performance.
Management Relief – Investors that own several rental properties are often faced with the burdens of intensive management and costly maintenance issues. Investors with high-maintenance and management-intensive properties can reinvest into properties requiring little or no management (net-leased and/or other passive hands-free-type properties).
Increase Depreciation – Investors can exchange from a non-depreciable property (such as raw land) or fully depreciated assets into an income-producing property that can be depreciated.
Estate Planning – Investors can protect equity accumulation and maintain their equity position through the 1031 exchange process by selling assets that have substantial equity growth into conservative assets that will allow for cash flow and the preservation of wealth.
DELAYED (Forward) 1031 EXCHANGE TIMELINE: IDENTIFICATION AND EXECUTION
Qualified Intermediary (QI)
Once you have closed on your relinquished property (sold property), your sale proceeds will be directly sent and be held with a qualified intermediary (QI) – A 1031 Qualified Intermediary (QI), also known as an Accommodator, is a company that is in the full-time business of facilitating 1031 tax-deferred exchanges .
Identification Period (45 days)
You have 45 days from the transfer of the relinquished property transfer (sold property) to identify a potential replacement property.
Completing the Exchange (180 days)
You have a maximum of 180 calendar days from the relinquished property transfer date to complete the 1031 exchange on the replacement property.