1031 exchanges can be beneficial to any US taxpayer. However, they’re often especially beneficial to taxpayers who are planning for retirement. In this article, we are going to talk about how you can best utilize 1031 exchanges in your retirement planning.
Retirement Planning & 1031 Exchanges
As you approach your retirement years, it’s important to get a plan in place. Perhaps you want to move to a warmer location to live out your golden years. A 1031 exchange can help you do that in a tax-advantageous way!
Let’s take a look at an example. Imagine you currently live in New York and you want to eventually move to Tampa for your retirement. Let’s also say that you own an investment property in New York (an apartment building, for example). You could sell that investment property and reinvest all the net proceeds into a replacement property condo of equal or greater value in Tampa.
But don’t get too excited! The new condo needs to be held for investment purposes for a substantial time period after the exchange. After you have satisfied that time period requirement, you could convert the condo into your principal residence at some point in the future.
Think About Your Intentions
Intent is an essential aspect of any 1031 exchange. When you engage in a 1031 exchange transaction, your intent needs to be to hold your replacement property for investment purposes (not personal use). Your intent to hold your replacement property for investment purposes needs to be valid and substantiated.
Years in the future, you may change your intentions and decide to convert your property into a personal residence. This requires a great deal of planning and coordination with your 1031 exchange team (your qualified intermediary, CPA, financial advisor, etc.) so it’s a good idea to get the ball rolling early in the process!
Maximize Your Gain when Selling Investment Real Property
A 1031 exchange can help you defer your taxes while maximizing your gain when selling qualifying real estate. A qualified intermediary is your ticket to a successful like-kind exchange. At CPEC1031, LLC we have over twenty years of experience working with clients on like-kind exchanges of real estate. Our team will walk you through the process of a 1031 exchange. Contact the team at CPEC1031, LLC today to learn more about our like-kind exchange services and see how we can help facilitate your next like-kind exchange!
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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