5 Reasons To Do A 1031
Avoid Taxes Forever
A 1031 Exchange is a 100% legal way for you to avoid paying any income taxes when you sell your real estate investment property. All gains generated from the sale of your old property is rolled over to your new replacement property (s). There are an unlimited number of times you or your heirs can successfully rollover gain and postpone tax.
Below are the estimated taxes you will avoid paying:
·Federal Capital Gains Tax
·3.8% Medicare Tax
·State Capital Gains Tax
·Depreciation Recapture Tax
Example: You sell a $2,000,000 paid off asset
Without 1031 Exchange: You will pay estimated $600,000 in taxes.
With 1031 Exchange: You will pay $0 taxes (Estimated 30% savings)
When you do a 1031, you can pull cash out in 1 of 2 ways:
1) You can pay taxes (aka BOOT) & pull cash out directly from net sale proceeds of your old Relinquished Property
2) You can pull tax free CASH OUT of your new Replacement Property(s) by mortgaging them after completion of 1031 Exchange, using a 60%-70% LTV Blanket Mortgage.
Higher Cap Rate
When you do a 1031, you can exchange a commercial property with a low yielding cap rate for multiple residential rentals with higher yielding cap rates.
Managed Retirement Fund
Doing a 1031 will help you fund your retirement by collecting $10,000 to $25,000 or more per month in positive cash flow via exchanging your commercial property for a portfolio of professionally managed residential rentals.
Powerful Estate Planning Tool
When you complete a 1031 Exchange any & all capital gains taxes owed on the sale of your investment property is eliminated upon your death and totally forgiven by the IRS. Your real estate investments will be bequeathed to your heirs with a step up in basis on the date of your death. In essence all your gain is wiped out and your heirs start fresh from where you finished. Passing your real property assets on to your heirs with absolutely no tax bite is one of the most powerful estate planning tools in USA.