As we’ve discussed on the blog in the past, the most obvious benefit of a 1031 exchange is to take profits from one property and reinvest it into another like-kind property without having to pay capital gains taxes on the money you received from the sale of your relinquished property. That’s a major benefit, but it’s certainly not the only reason people pursue a 1031 exchange. Here’s a quick look at 10 other reasons why a 1031 exchange may be perfect for you:
Exchanging Out Of A Non-Income Producing Asset - You could exchange vacant land for property that will be used to generate more regular income, like a rental property.
Diversify Your Portfolio - You could exchange one property for multiple properties to diversify your investment portfolio.
Consolidation - Conversely, some people like the option of consolidating many properties into one larger investment asset.
Swapping For Assets That Are Closer To You - You could exchange like-kind properties for one that is closer to where you live, making the property easier to manage.
Move Into A Better Market - If you see growth opportunities in another city or state, a 1031 exchange allows you to easily acquire assets in that market.
Hands On/Hands Off Properties - Perhaps you’re looking to take on a very hands-on asset, or you want to shift to a much more passive asset. You can do this through a 1031 exchange.
Improving Cash Flow - Exchanging assets can make it easier to generate improved cash flow on your investments.
Depreciation Options - A 1031 exchange can be used to move away from a fully depreciated asset.
Planning For The Future - Perhaps you plan to move to be closer to your grandchildren or you want to retire to a warmer climate down the road. A 1031 exchange allows you to acquire assets in these areas long before you personally make the move.
No Limits On Exchanges - There are no limits to how many 1031 exchanges you can perform, meaning you can use these exchanges over the years to turn your modest asset portfolio into a real estate empire.
As you can see, there are a number of reasons why a 1031 exchange makes sense for the right investor. To learn more about these benefits, or to talk with an exchanger to see if a 1031 exchange is right for you, give the team at CPEC 1031 a call today at (612) 643-1031.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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