Understanding the 1031 Exchange and How it Affects Investors

By David Wieland, CrowdFund Beat Guest Post,

The following is a guest post written by Realized Holdings, a valued WealthForge partner who helps investors reinvest their 1031 equity.

With commercial real estate values at an all-time high, there’s been a lot of buzz about 1031 exchanges. Why all the excitement? For starters, investors can save 30% to 40% in taxes on the sale of their investment property by completing a 1031 exchange. While tax code may be boring, saving money is not.

A 1031 exchange allows investors to defer payment of capital gains taxes when they sell properties by reinvesting or “exchanging” their equity into “like-kind” replacements. By effectively shelving the taxes, 1031 exchanges are a powerful tool for preserving capital, increasing recurring tax-advantage income, accumulating wealth and facilitating tax-free generational wealth transfer.

Realized estimates that in 2016, individual investors will complete 285,000 1031 exchanges, representing $67 billion of equity and $187 billion of properties purchased.  On average, each of these individual investors will defer capital gains-related taxes equal to 34%. This begs the question, where else can an investor make 34% inside of 180 days?

So, what’s the 1031 exchange catch? The IRS gives investors a ridiculously short 45 days to identify replacement properties. All too often, this forces the investor to choose between paying taxes or overpaying for inferior properties that do not meet long-term financial and lifestyle goals. Additionally, there are many procedural rules to follow which, if missed, may result in the full tax burden being due, even though the investor purchased another property.

Given the magnitude of the overlooked 1031 exchange market, understanding the 1031 exchange process may be of significant value to you, your investments and business.

1031 exchanges are nothing new — in fact, they’ve been around for nearly 90 years. However, recent innovations are leading to custom solutions for high net worth investors that you may not have thought possible. A few examples include:

  • Investors with more than $250,000 of 1031 equity can now reinvest in individualized portfolios of institutional-quality properties offering long-term, tax-advantaged, passive income.
  • Investors with more than $1 million of 1031 equity now have the option to pull out up to 90% of their equity after completing a 1031 exchange and use it any way they wish, without triggering capital gains tax consequences.
  • Investors with more than $10 million of 1031 equity now have custom ‘parking’ solutions that give them years, not months to find replacement properties.

Stay tuned for new offerings from Realized involving 1031 exchanges in the coming weeks. Make sure to check back on The WealthForge Network for more information. If you have further questions or want to learn more, email Diana Alderbashi at dalderbashi@wealthforge.com.

http://ow.ly/HQJk303mRsy

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

ForbesHow This Millennial Built A 7-Figure Business Using Equity CrowdfundingForbesJules Schroeder , Contributor I write about millennials following nontraditional paths Opinions expressed by Forbes Contributors are their own. Most people I talk to are astonished when I tell them I sp [...]

Entrepreneur3 Crowdfunding Tips Every Company Forgets From a Brand That Raised $800000 and Got AcquiredEntrepreneurCrowdfunding takes a lot of planning, whether you're gearing up for a launch, a ship date or thinking about the next source of funding you'll pursue. But it [...]

Boing BoingCrowdfunding for medical costs is turning health-care into a reality-TV competitionBoing BoingIt's a sad -- if gripping -- document of the wildly inefficient, friction-hot mess of medical care in the US, where one-fifth of household spending is lavished on healthcare, [...]

Youris.comApproaching energy crowdfunding with eyes wide openYouris.comFor example, in Germany cooperatives have always been important in financing small-scale solar energy. And if you look at all the renewables capacity in the country, I think more than 50% is in the hands of private [...]

Telegraph.co.ukBrewDog keeps the taps open after hitting £10m crowdfunding markTelegraph.co.ukPunk IPA maker BrewDog has surpassed its £10m crowdfunding target but opted to extend the deadline in a bid for even more cash.BrewDog extends crowdfunding deadline after raising £11.3m - BBC [...]

VentureBeatIndiegogo moves beyond crowdfunding to help startups with manufacturingVentureBeatIndiegogo made its name as a crowdfunding site where startups could get cash for their big dreams. But the San Francisco company is moving beyond that idea to helping startups with design for [...]

Comics BeatCrowdfunding Watch: Curiously Cute Critters and a Cyberpunk CollectionComics BeatI recently returned from the Penny Arcade Expo (PAX) in San Antonio, Texas and I can't stop thinking about the games I saw. From the interactive love story Florence to Tunic, a story about [...]

Entrepreneur12 Key Strategies to a Successful Crowdfunding CampaignEntrepreneurI've Raised Close to $2 Million in Crowdfunding Campaigns -- Here Are My Secrets · Next Article. 12 Key Strategies to a Successful Crowdfunding Campaign. Image credit: Shutterstock · Aj Agrawal • Contr [...]

EntrepreneurLive at CES: Indiegogo CEO Predicts What's Next for CrowdfundingEntrepreneurAt CES, hundreds of companies of varying sizes and stages can attribute crowdfunding platforms to their funding, product design and success. One of those being Indiegogo. Founded in 2007, the [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

CrowdFund Beat Media

2018 Fintech World Conference & Workshop, Announcement:Game Changer” Fintech World Media, PR & Marketing Group Proudly Presents: lnkd.in/gqdCrTr

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |