1031 Exchange Explained

Copyright 2015 HomeUnion, All Rights Reserved

Increase the Earning Power of Your Investment Property with a

1031 Exchange


What is a 1031 Exchange?

An investment strategy for selling a qualified property, and

then proceeding to acquire another qualified property

within a specific time frame.

Benefits of a 1031 Exchange: Tax Benefits• The Capital Gains Tax

- Short term capital gains tax• investment held less than one year (based on tax

bracket)• long term capital gains tax Investment held longer

than one year 0-25% federal tax (based on tax bracket)

- Recapture of depreciation tax - flat 25%


Benefits of a 1031 Exchange: Summary

• Increase portfolio of wealth • Change type of investment property • Move and exchange your investment

property to a new location • Updated depreciation schedule for your

investment property



You Can Also Diversify Your Exposure & Risk

Strategy to Maximize Cash Flow

• Diversify Your Risk• Maximize Cash Flow• No Taxable Event

VS.


Rules Around 1031

Time Requirements

• Identification of Replacement Property- 45 days from the close of the relinquished

property to identify replacement properties.


• Acquire the Replacement Properties- 180 days after the close of escrow

OR- April 15th (or date taxes are filed), whichever

comes first


Timeline

Day 0Close of Escrow

45 Days*Identify

Property(ies)

180 DaysClosed on

New Property*No extensions

Replacement Property Requirement

• The Three Property Rule- Maximum of (3) replacement properties

without regard to fair market value


OR…• 200% Rule

- If more than (3) properties, the total aggregate value of all replacement properties cannot exceed 200% of the relinquished property value

• Example of 200% Rule

Replacement Property Requirement (cont’d)


Exception to 200% Rule

• 95% Rule- If too many properties are identified, you must

acquire 95% of the total value of all identified properties to still qualify for an exchange


Exchange Funds

• Buy properties of equal or greater value of relinquished property

• Assume the same amount of debt $$$- New cash offsets new loan - Too great of a loan

• Use the proceeds/cash in the new property/properties


Summary

• 1031 Exchange is a tax code• Upgrade properties w/o a taxable event• Increase the value of your holdings • Increase cash flow

HomeUnion

Real Estate Investment Management Firm



To learn more, call a Real Estate Solutions Manager at 1-866-732-3220

OR

Schedule a free consultation at

https://Info.homeunion.com/SDS-Schedule-a-Consultation.html?utm_source=Advertising&utm_medium=Slideshare&utm_campaign=1031Webinar

Date post:	13-Apr-2017
Category:	Investor Relations
Upload:	homeunion
View:	256 times
Download:	1 times

1031 Exchange Explained

Investor Relations