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1031 Resources & Information
Does California have any special 1031 Exchange rules and regulations?
There are no special requirements for doing a 1031 Exchange with a property that you are selling in California. However, if you are going to exchange from CA to another state, you need to be aware that the State of California Franchise Tax Board tracks you when you leave the state with their deferred tax dollars. In 2014 California implemented a “clawback provision” which effectively requires that you file an informational tax return with the State of California each year, showing that you still own the property that you purchased in another state through your 1031 Exchange. They do this because if someday you decide to sell the other property and “cash out”, California will come back and “clawback” the taxes on the gain that was made while you were doing business in the State of California. For more information, please see the text of California Assembly Bill 92 here: Bill Text – AB-92 State government.
What are the benefits of doing a 1031 Exchange?
While the tax deferral benefits are enormous (deferring Federal Capital Gains Tax, State Income Tax, Depreciation Recapture & Healthcare Tax), I would argue that the non-tax benefits are the real reasons why people do 1031 Exchanges. Exchanges are used by investors who want to do one or more of the following:
• Increase your cash flow from your investment property(ies)
• Purchase a property with greater potential for appreciation in property value
• Buy a property that is closer to home
• Diversify into multiple properties
• Consolidate into one property that is easier to manage
• Buy a dream retirement home
• Purchase properties that will set up heirs for the future (estate planning)
• Acquire property with less deferred maintenance
How do I know if a 1031 Tax Deferred Exchange is right for me?
If any of the 1031 benefits bullet points interest you, a 1031 Exchange is worth exploring with a 1031 Exchange Specialist like me. Please give me a call at (442) 287-7239
Is a Qualified Intermediary (AKA accommodator or QI) needed?
Yes. To avoid a taxable sale of the Relinquished Property, the use of an intermediary in virtually every 1031 transaction should be utilized. In addition, the Exchanger must enter into written agreements with the QI before the Relinquished Property is sold.
What is Like Kind Property? Can I sell my rental house and buy a 4plex? Can I sell my vacant lot and buy an office building?
Yes, you can buy ANY kind of business or investment real estate, anywhere in the US. The “like-kind” requirement does not mean selling and buying the same exact type of property. In an IRC §1031 transaction, you can exchange real property for virtually any other real property in the United States, as long as the property is held for productive use in a trade or business or for investment purposes. You can sell a rental house and buy apartments, commercial, industrial, mini storage, vacant land, agricultural, etc.
What My 1031 Clients Are Saying
Jordan is all about responding to your every question in detail. If you’re looking for somebody that is attentive to detail, thinks creatively and prides themselves on customer service, you found the right team. I highly recommend Jordan for all of you 1031 exchange needs.
Jordan is incredibly responsive, and is a great resource for my team and our clients. He has helped our clients get through not only the 1031 Exchange process, but has also given us valuable insight on recent Tax Code updates (e.g. Opportunity Zones and the Tax Cut and Jobs Act). All in all, Jordan definitely helps me better serve my clients.
I was extremely impressed with Jordan during the process of doing a 1031 exchange. He is very thorough in his explanations and had extensive knowledge of the transaction process and tax code. I recommend Jordan to anyone who is looking to do a 1031 Exchange.
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With offices near San Diego, Irvine and South Bay, IPX1031, the nation’s largest exchange facilitator and accommodator, provides industry leading exchange services including guidance, expertise, security and key information on 1031 Exchange rules, regulations and strategy. 1031 Exchange expert, Jordan Phillips offers you customized solutions to defer capital gains tax and maximize equity in your 1031 like kind investment property.
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