There are many benefits of a 1031 Exchange. The immediate benefit is deferring tax liabilities on the sale of your investment real estate, being able to reinvest all of the equity you have in that property not just the after-tax equity is the primary benefit. Multiply this a few times over and imagine what a difference this can make on your net worth. Estate planning is another big benefit of 1031s. Your heirs receive a step up in basis of the property they inherit so you’re building and passing on generational wealth.

I think Like Kind may be one of the more confusing terms in the real estate industry! Like kind does not mean single family for single family, Like Kind means real property for real property. So you can exchange your single family rental for a duplex, land, a commercial property, or a combination of property types.

If you’re buying down in value from the Relinquished to Replacement Properties, you will be doing a Partial 1031 Exchange and have a tax liability on the difference between values. This also applies if you choose to retain any cash proceeds from the sale of your Relinquished Property. You will be taxed on any cash retained and be doing a Partial Exchange.

The sooner the better! It’s best to reach out for a consultation in the planning stages of listing your property. A successful exchange is all in the planning. We open the exchange when you have an accepted offer on your Relinquished Property and it’s in escrow. For more info, give me a call at (702) 232-4576 or click here for my online Start an Exchange form.