Benefits of 1031 Exchange


For quite some time, it has been known that only death and tax are the only absolute things that have stood the test of time. This notion has been in the belief system of individuals for any year until the birth of the 1031 exchange law, which is now popularly known as the tax deferred exchange. This method allows for significant tax advantages to the people who own commercial properties. Investors in real estate can now sell given properties that meet certain conditions, invest the proceeds back and get new properties in a give time limit. The 1031 exchange rule has provided safe haven for most investors. If you are still in the dark on its benefits, you can read the advantages of 1031 exchange below so that you can develop a deeper appreciation of the rule. Visit the official site for more information about 1031 Gateway.

The 1031 exchange allows you to defer payment of taxes allowing you to sell your investment property, then investing back the proceeds in different property, or replacement property, so that you can defer the normal taxes, like income, depreciation and capital gains taxes. These costs can have a very significant impact more so, if there is a low adjusted cost basis. The 1031 exchange, therefore, allows you to make exchange on business and investment properties without spending so much of your money.

The 1031 exchange allows leverage and an increase in cash flow for reinvestment. When you defer payment of taxes, you will have more disposable income for investment. With these huge amounts of money at your disposal, you can be able to invest in other businesses and properties that have a significant higher investment advantages, compared to if you sole the property and incurred all the taxes involved with selling and buying new property. Follow the link to learn more information about 1031 exchange.

It might not be quite apparent that 1031 exchange is a great strategy for wealth and asset accumulation. However, the capability to accumulate assets and wealth over a period when using 1031 exchange is very possible. Most of investors who sell and purchase new properties using 1031 exchange in their lives have acquired massive cash flows and have significantly increased their net worth over the given period. Theoretically, it is possible for one to exchange into many properties over a given period or years, then transfer or pass the properties to their heirs when they die. His or her children can add value of the properties by stepping up the cost basis to fit the current market value, at the same time avoiding taxes. Learn more about 1031 exchange , follow the link.