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

Daily MailNick Clegg crowdfunding former Deputy PM appeals donations ...Daily MailLib Dem MP Nick Cleg is 'crowdfunding' to help bankroll the publication of thousands of party leaflets for canvassing ahead of the re-election bid in Sheffield ...and more » [...]

Android Authority (blog)Crowdfunding project of the week: BIKI is an underwater drone that ...Android Authority (blog)Drones are fun, but they can only move through air. We know plenty of you prefer to go underwater. If so, BIKI is for you.BIKI Robot Fish Paddles Past Crowdfunding Goa [...]

Hall alone in vote against rape kit crowdfundingRockwall County Herald Banner“Rape kit testing is far too important to rely on an undependable funding source like crowdfunding. This is a core function of government and as such it should be funded by government. Victims deserve to know [...]

Virginia Tech launches its own crowdfunding site to reach new generation of donorsRoanoke TimesOne of the first four pilot projects that went live on Jump, Tech's crowdfunding website, lets users pay for as little as one local child to attend educational programming by the Moss A [...]

New York MagazineFacebook Rolls Out Crowdfunding to EveryoneNew York MagazineDepending on your perspective, the rise in popularity of crowdfunding is either a fantastic new way that the internet lets strangers help each other out, or emblematic of the decay of institutional safeguards [...]

Youris.comCrowdfunding boosts green powerYouris.comWith state subsidies falling, crowdfunding platforms are increasingly stepping in to help make green power projects a reality. For individual investors, injecting anything from a few euros to hundreds of thousands, they are a tangiabl [...]

Tech City NewsWhy are more and more tech firms turning to crowdfunding?Tech City NewsWhen Facebook bought virtual reality firm Oculus VR for £2bn (£1.3m) in 2014, the crowdfunding world looked on with amazement. Oculus, founded in California in 2012, had raised its crucial first $2m o [...]

Crowdfund InsiderResearch on Risk Shows Crowdfunding Has Significant Fraud Immunity: Here's WhyCrowdfund InsiderIt may be counterintuitive but the research has been done and the results are now in – and it's as we've been saying for almost five years. Fraud in crowdfund [...]

Finance MagnatesEthereum Alternative Æternity Starts Phase Two of Crowdfunding CampaignFinance MagnatesÆternity's blockchain is built from scratch with most of the transactions done off-chain for speed and efficiency. Avi Mizrahi | News (CryptoCurrency) | Monday, 29/05/2017|14:55 [...]

Devon LiveCrowdfunding page set up for family of boy who died after drug use ...Devon LiveA fundraising page has been set up in memory of a 15-year-old boy who died on Friday night after taking a recreational drug at a youth disco. Yesterday Devon ...and more » [...]

CFB Finance

Marketwired

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

Press Release

CrowdFund Beat Media

Teacher turns to crowdfunding to buy greenhouse for Nunavut students upflow.co/l/bqoI pic.twitter.com/chHa3MnCfT

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 |