In commercial real estate investing, the 1031 Exchange structure has attained huge popularity. This is a direct swap or exchange between two like-kind properties, investments, assets or businesses, where one property is sold, and the proceeds used to buy another similar type of property. The most exciting part of this exchange is that, investors will not pay capital gains tax today, instead these taxes get deferred, indefinitely. Exactly is a 1031 Exchange, benefits and eligible for the 1031 Exchange.
Investors need to remember that only like-kind of properties are eligible for the 1031 Exchange. For example, investors can exchange land with a NNN Property building, as long as both the properties qualify as an investment, for trade or business activity. Exactly is a 1031 Exchange and benefits. However, note that investors cannot exchange personal residential property for another residence to defer capital gains taxes under this tax rule! A few hallmarks of 1031 NNN property exchanges:
- Delayed Exchange: buy a like-kind, NNN lease property after selling the relinquished property within 45 days and complete all Exchange formalities within 180 days (Delayed Exchange);
- Passive management of investment property: to do away with excessive maintenance and management cost, use the 1031 property exchange and transact exclusively with NNN properties;
- Build Net Worth: the deferral of capital gains tax releases further investment capital, which can be used to build a bigger investment NNN property portfolio.
Use the expert guidance (Delayed Exchange, Passive management of investment property and Build Net Worth ) of your trusted advisors at Triple Net Investment Group, call or email us today!
