Avoiding Big Taxes with 1031 Exchanges

Being a real estate investor is exciting and can really pay off when you get good at it. You learn how to flip homes and find good hard money lenders who can fund fast so you lock in the best deals possible.

As you built up your portfolio and manage your properties over the years, maintenance and upkeep can take its toll and at some point you might find yourself burnt out.

Owning duplexes, triplexes, fourplexes and other small apartment properties are usually very labor intensive and a lot of times don’t bring in enough income to warrant hiring a manger.

Now, because you have been writing off depreciation on your properties over the years and making profits on the property’s value increase, you might find yourself looking at a huge tax bill should you sell and take your profits.

This is where a 1031 exchange can really help you out of a pickle and turn that management intensive property into management free properties so you can continue to gain wealth but not have to pay the big tax bill yet.

You must use a professional intermediary to perform the 1031 exchange and the new property must be “like kind” property meaning it can’t be your primary residence.

What are some good management free property investments that you could exchange for?

How about a large leased property to a long term tenant like Auto Zone or a large grocery store chain?

These types of leases usually last for 15 to as long as 75 years and require very little maintenance as the tenant typically takes care of the bulk of the repairs and upkeep.

Another type of property to consider is large apartment buildings. They typically bring in a nice amount of revenue even after paying for upkeep and a manager.

A 1031 exchange can really change your life and keep you from having that large tax bill until a later date!

We can recommend a couple of good 1031 exchange companies to help you convert the headache to life on the beach!

Mike Corgiat
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