Awareness of the benefits of using tax saving 1031 exchanges are gaining great visibility again. Still, the big question most have may be “is a 1031 exchange really for me?”
Who are 1031 exchanges for?
Wealthy individuals and families certainly have a lot to gain from using 1031 exchanges. Whether your family already owns a substantial amount of NYC or global real estate, you recently struck it rich with a hot tech startup, or you won the lottery; investing in real estate and leveraging 1031 exchanges are definitely a smart move. They’ll help preserve that wealth, and maximize its growth, while legally keeping the tax man at bay.
Active Real Estate Investors
Serious and active real estate investors really shouldn’t be rushing into the game without some form of tax saving vehicle. That may be a variation of a self-directed IRA or 1031 exchanges. Just don’t keep throwing away double digits to the IRS each year in overpayments. If you don’t need the money, then you could at least be working less and netting the same. And there are plenty of great causes to support directly.
Millennials Just Starting Out
1031 exchanges are not just for real estate pros and wealthy families. In fact, many of those individuals wouldn’t be where they are now in the NYC real estate world if it wasn’t for using 1031 exchanges in their earlier days.
So whether you are fresh out of school, still working on a degree, are building a tech startup you are passionate about, or are working hard to move up the career ladder, but want your money working harder so you don’t have to – definitely investigate the benefits of exchanges in order to grow your passive income and wealth faster.
Overcoming the Objections
Just knowing the benefits of like-kind exchanges isn’t enough for everyone. Many still have doubts and questions.
Some of the most common are:
One of the great provisions of this tool is that investors can also buy and improve properties or build new properties with 1031 funds. This again broadens what can be invested in. Don’t forget; NYC is full of mixed-use properties, commercial buildings, and redevelopment opportunities, which can give investors multiple tenants in different industries; providing incredible diversification without sacrificing the benefit or having hard assets.
So is a 1031 exchange for you?