If you’re looking to invest your money, two of the first places you will likely look are the stock market and the real estate market. Each option has its own unique benefits and drawbacks. In this article, we are going to explain a few reasons why investing in real estate instead of stocks can be beneficial and how a 1031 exchange can take your real estate investment to the next level.
Capital Gains Tax Burden
The biggest benefit to investing in real estate over stocks is that you may be able to avoid your capital gains tax liability when you sell.
Selling stocks typically results in capital gains taxes. Depending on the sale, this can add up to a sizeable tax burden for the seller.
Selling real estate in a typical transaction will also result in a capital gains tax bill, but these taxes can be deferred with a 1031 exchange. All you need to do is make sure that your sales proceeds are reinvested into like-kind real estate (and meet several other 1031 requirements) and you will be able to defer your capital gains taxes.
Qualified Intermediary Services
Working with a qualified intermediary is one of the best ways to ensure a successful 1031 exchange. Like-kind exchanges are complex transactions, and it’s good to have a professional who understands the process backwards and forwards. An intermediary can answer all of your questions, prepare all of your documents, and advise you on the specifics of your exchange. Reach out to us today to speak with our qualified intermediaries about your 1031 exchange. Our offices are located in downtown Minneapolis but we work with clients throughout Minnesota and across the country.
Start Your Exchange: If you have questions about investing in real estate with a 1031 exchange, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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