Tag Archives: 1031 exchange

Why You May Want To Do A 1031 Exchange

Being involved in 1031 exchange will give you several benefits.  Its something that many investors have used over the years when buying real estate,its basically a tax strategy to defer your taxes so that way you can use the capital and help it to keep on growing and working for you.  Many investors have used it in their approach in buying homes in Santa Maria as investment properties.  It does not just help you to find the right property to own.   where to loan and finding the right people to work with but it also help you in making more money and saving your money from being taxed.  A 1031 exchange is a specific tax stragtegy, that is usually used for those that own real estate property as an investment.  This 1031 exchange can be used to roll-over profits earned from selling real state property to purchase another property instead of paying tax on the property that was already purchased.  For example when an investor buys one of the Santa Maria homes for sale at a discount and later turns around and sells that property for a profit he can take that profit and reinvest versus having to pay taxes on that profit as he normally would have to do on a regular transaction.  But there are some specfics that you need to familiarize yourself with first, now there is more to it than just this but at least you will have some idea and enough for you to want to learn more about doing a 1031 exchange.

There are two major benefits of 1031 exchange, first, it allows you to delay specific tax from the gains of the sale of the property, and instead invest it into other properties, from the capital gain so that it can be used later. Second benefit from 1031 exchange is that it allows for more equity to be part of the investment, since you are reinvesting your gains from the previous sale withoug having to give up any of it to taxes you have more equity invested in the new property from the very begining. So every time you invest in a new property, it will gain a higher value.  Now keep in mind this is a tactic that you can use every where not just in Santa Maria, California, but you will have to investigate how your state treats investment properties.  However, it should be remembered that the investment you will take into consideration is that it should be of the same kind of properties.  Another thing to keep in considertion is that you cannot touch any of the funds from the sale of your previous property to avoid the any Capital Gains.  You will have to use a trust company in doing a 1031 exchange that will help you to facilitate the process as well as make sure you are doing it correctly usually your title company can help you facilitate that just make sure you let them know that you will doing a  1031 exchange. Doing a 1031 exchange will help you with getting more out of your property and making a strong foundation in your real estate investment.

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