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CTSSHAH
@ctsshah
#1031Exchange #SaturdaySchool So last Saturday I had touched on Capital Gains Tax as it pertained to Home Sale of your primary residence. I had run out of retirement savings account for my "Don't let the Tax Tail Wag the Dog" series and so I am now gonna keep w/ the tax themed content but pivot to real estate related tax stuff for the moment as real estate is an exceptional way to increase passive income that you can then invest or build out more real estate. WHO should be aware of Section 1031 for Investment Properties? - "In real estate, a 1031 exchange is a swap of one investment property for another that allows capital gains taxes to be deferred. " - Investopedia - This would be applicable to anyone that is involved or wanting to be involved in investment properties WHAT do you need to know about Section 1031 for Investment Properties? - There are specific rules to keep in mind in order to keep the IRS happy ... such as the properties must be considered "like-kind" in order for capital gains taxes to be deferred - It is something to understand, as there is no limit on how many times or how frequently you can do 1031 exchanges ... unlike the Home Sale exemption from last week WHERE can I learn more about a 1031 Exchange? - So I started learning from Investopedia and then found out that they have companies specifically for 1031 Exchange - link is in the comments - This can be a complex process and so having an expert, especially if this is your first time is probably worth the additional cost and expense WHEN should I be thinking about 1031 Exchange for Investment Properties? - If you are thinking about selling your current investment property and then reinvesting that money into a new investment property - When you exchange your original and roll it into the next one you are able to delay any capital gains tax for the moment and use all the funds to reinvest it into a new property WHY should I pay attention to 1031 Home Exchange w/ Investment Properties? - Deferring capital gains taxes allows you to leverage the entire sale price into your next investment property which can then be done again and again to build on your initial investment. - Then as time goes on you can snowball all your profits into hopefully one tax event that is at a long term capital gains tax rate many years later HOW do I qualify for 1031 Exchange for Investment Property? - Be sure to talk to your CPA or consider a 1031 Exchange Company - The two key timing rules to be aware of are: 45 day rule to desginate on replacement property and then 180 day rule to close on new property (these both run concurrently) Resource: Investopedia / Video: https://www.youtube.com/watch?v=BHdmRjvCDY8 P.S.: A good real estate resource is https://www.biggerpockets.com/ if you are looking to get into real estate. If real estate doesn't sound like your cup of tea, but still want to be involved in real estate you could always consier #REIT #WeekendVibes #AdditionalIncomeStreams #RealEstate #TaxTail
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