1031 exchanges can supercharge real estate investment, but don’t make this mistake…
Tax saving 1031 exchanges can give real estate investors incredible momentum and help them snowball returns to grow wealth and cash flow far faster. Unless you make a big blunder. The most common of these is absolutely timing.
Check out key dates, timelines, and 1031 terms in this post from The Ratner Team
The National Association of Realtors believes that the importance of 1031 exchanges is so critical to individual investors and capital flows which support the market in general that it has named them as one of their top items to protect in the 2016 NAR Legislative and Regulatory Agenda.
Early Planning is Vital
Deciding to try and use a 1031 exchange the week before your property sale goes to the closing table can make things really difficult. It makes it hard for those organizing the closing, the exchange, and for you.
What you should know well in advance includes:
The Need to Multiple Investment Property Options
Any experienced commercial real estate investor knows that it can take time to close a deal, multiple issues can arise in the process, and that due diligence can change everything.
This makes it critical for investors using 1031 exchanges to identify new acquisitions early, and if they are wise to name several backup property options as well. Note the several rules for naming backup properties, and what qualifies as ‘like-kind’ exchanges, and what does not.
If you are coming up short in your New York property search there is a good chance that is because the best properties are now frequently held and marketed privately off-market. You’ll need connections to dig up and get introduced to these deals.
The Big Fix!
What if you are already late into a deal, or have even contracted to close on a new acquisition without selling a previous one yet?
There is a massive power tweak few are aware of. That is reverse 1031 exchanges. These allow you to buy with confidence, then sell and get the tax break on the proceeds of another property. Stay tuned and we’ll let you know how to do these deals next week…