The 1031 Exchange Opportunity

It's a basic fact that the large tax burden that often accompanies the sale of an investment property can be a troubling issue for many property owners. Thankfully, this burden can be removed through an Exchange of real estate, effectively trading one investment property for another. The 1031 Tax Deferred Exchange offers a great solution for those needing to defer the capital gains tax that arises with the sale of investment real estate.

Real Estate owners can accomplish virtually any investment objective with 1031 Exchanges including greater leverage, diversification, improved cash flow, geographic relocation, and/or property consolidation. If you are involved with investment real estate in any capacity whatsoever - whether experienced or a novice - you'll find the information offered at this site to be a powerful resource. Of course, this information is not intended to replace qualified legal and/or tax advisors. Every taxpayer should review their specific transaction with their own legal and/or tax counsel. Here you'll find tips, techniques and strategies for the Exchange of investment real estate properties as well as comprehensive information about every critical aspect of the actual process itself.

A successful exchange results in the taxpayer being able to utilize 100% of the proceeds from the sale of property to purchase a new property thereby deferring the capital gains taxes.

In 1984, the IRS authorized the “Starker Exchange” commonly known as Internal Revenue Code section 1031. IRC 1031 permits investment property owners to sell a property and defer capital gains taxes and depreciation recapture taxes at the time of sale.

Real Estate investors may opt for a forward or reverse exchange depending on their situation. In a forward exchange the investor has 45 days from the close of escrow on his/her property (the relinquished property) to identify a replacement property(s). The replacement property(s) must be of equal or greater value in order for full tax-deferral to be recognized. The investor then has 180 days from the close of escrow of the relinquished property to acquire the replacement property(s).

For some investors a reverse exchange may be more appropriate for their particular situation. Reverse exchanges were first allowed under Revenue Procedure 2000-37. In a reverse exchange the deadlines are reversed. The investor may obtain a new property(s) first and then dispose of the relinquished assets, with less time constraints. The investor has 45 days to declare which property is to be relinquished and 180 days to sell that relinquished property in order for tax-deferral to be recognized.

It is often difficult in the short 45 day time frame to locate a property that has the right purchase price and debt ratio to meet the 1031 requirements, can be closed in a timely manner, and arrange for any financing that may be required. A Tenants In Common ownership interest alleviates these time consraints as a variety of securities are offered, with due diligence completed by Welton Street Investments, (You and your financial advisor should read the private placement memorandum), financing in place, and closing time frames clearly identified.

Advantages of Undivided Tenants-In-Common Interest Ownership

The purchase of a TIC ownership interest may solve many of the issues involved in successfully completing a 1031 Exchange. TIC advantages include:

• Economies of scale
• No active management hassles
• Potential increased after-tax cash flow
• Pre-arranged, usually non-recourse, financing
• Can be identified & closed in a timely manner
• Investment can often be diversified into more than one property

How will a Tenants-In-Common 1031 Exchange benefit you?

With a TIC 1031 Exchange, you no longer have to feel burdened by your real estate. Through your management contract, a manager will be retained to manage the asset while you enjoy all the benefits of income property ownership - with no property management duties.

Your income from the replacement property may be higher than that which what was being received from the original property. You can potentially earn cash flow on the re-invested, dormant equity of the relinquished property.

Tenant-in-common offerings typically begin with a cash-on-cash return of approximately 6% to 8%. Of course, this is real estate, so the cash flow can fluctuate, up or down, based on many factors including, but not limited to, changes in tenant occupancy, expenses, market conditions and environmental issues.

Without question, this web site is the information source for learning how to understand and implement a 1031 Tax Deferred Exchange.

Those who will benefit from the information include.

• Property Owners Real Estate Brokers
• CPA's / Tax Advisors Lawyers
• Property Asset Managers Insurance Professionals
• Lenders Anyone Involved with Investment
• Consultants Real Estate Issues
  

The availability of a comprehensive knowledge base dealing with all aspects of a 1031 Tax Deferred Exchange has, up to now, been lacking and very hard to come by. You'll find this site to be one of the few places where you can easily collect the information you need and find the answers to your questions... on the entire 1031 Tax Deferred Exchange process, from start to finish.

You'll find that this site offers valuable information and "real-world" knowledge and techniques to implement and successfully complete a 1031 Tax Deferred Exchange that even highly experienced professionals have found invaluable. Investing in real estate is a process...a lot of ideas and knowledge that combine to create a successful investment that fully meets the needs of all the parties involved.

"No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment."

- taken from Section 1031 of the Internal Revenue Service Code of 1986