In the final article of our seven-part series on the basic requirements of a 1031 Exchange, we will be discussing the last requirement; reinvestment of cash, also known as the Equal or Up Rule. While it’s the last stretch and you’re almost home free with tax deferment, the final requirement is just as important, if not more so, than the rest. Here we will explain exactly how the reinvestment of cash works and what the Equal or Up Rule is. If you follow along with the series, and this last requirement, you’ll be on your way to a successful 1031 Exchange! Reinvestment of Cash / Equal or Up Rule ..read more

Think tax-deferred 1031 Exchanges of real estate are too new, sketchy or scary to try? Every week, I talk to investors just like you who are surprised to learn that: 1. 1031 Exchanges have been around longer than IRAs and 401(k)s; 2. 1031 Exchanges are 100% legal; and, 3. 1031 Exchanges can be completed by novice investors. Here are some myths I confront every day: Myth #1: 1031 Exchanges Are Too New To Be Trusted In 1921, Congress enacted The Revenue Act which authorized the exchange of like-kind property without paying tax. It was added to the Internal Revenue Code (IRC) Section 1031 and ..read more

A 1031 exchange doesn’t have to be an all-or-nothing move. It is possible to complete a partial 1031 exchange that allows you to either take cash out, purchase less than you sold, or both. But there are tradeoffs. Completing a partial exchange creates a tax liability you will want to thoroughly understand before moving forward. This article will help you determine if it is a good fit for your personal and financial goals. Join our partial exchange webinar! Or keep reading to find out what a partial 1031 exchange is and then walk through the process. What is a 1031 Exchange? A 1031 exchang ..read more

Many people know about the primary residence exclusion that allows them to take the first $250,000 in profit ($500,000 if you’re married) tax free after just two years of occupancy. And more and more people are learning about the opportunity to do that repeatedly. But, did you know that you can convert an investment property into your primary residence and take advantage of that tax break? Even if you used a 1031 Exchange into your investment property, it’s still an option. Converting from Investment to Primary Residence Here’s the deal on converting investment property into your primary resid ..read more

For accredited investors looking to move from active to passive investing, there are opportunities to 1031 exchange real estate investments into passive DST (Delaware Statutory Trust) investments without paying tax. DSTs are becoming a more common route to passive investing as the market matures. Here we will clearly define a DST and give a few of the advantages and disadvantages of moving into this type of passive real estate investing using the 1031 exchange.  What is a DST?   A Delaware Statutory Trust (DST) is a passive investment opportunity that allows investors to own fraction ..read more

5 Things to Look For In Your Qualified Intermediary Before you can begin your 1031 exchange, you will have to select a Qualified Intermediary (QI). A good QI can make or break your exchange. To ensure that everything goes smoothly it is important to make sure that your Qualified Intermediary is actually qualified. Here are five things to look for in a QI. 1.   They should use a segregated, qualified escrow account (at no charge) Make sure that the QI you select does not have a pooled exchange account. It is important to ensure that your exchange account is not comingled with som ..read more

This topic is one on which I have often meditated. As a Christian, how should one tithe on their income as a real estate investor? Gross profits before expenses work differently when it comes to a real estate portfolio. The Bible tells us to tithe on a tenth of our gross income. Do we include appreciation? How do we honor God when real estate investing does not produce a straightforward income? There are many ways to interpret tithing from a scriptural lens, so here are my two cents on how God has called me to live. First, there’s no right or wrong way in budgeting or giving. The right or wron ..read more

Wondering how to transition into multifamily? While you may know that 1031 Exchanges let you defer capital gains taxes and depreciation recapture when you move from one property to another – did you know that you can use this same strategy to consolidate multiple smaller property sales into one larger one without paying taxes? Owning quite a few smaller properties can leave you spread over a large area trying to maintain multiple locations. What if you could exchange all of those properties for one large multifamily unit without sacrificing any of your gain to Uncle Sam? The good news is, with ..read more

While we enjoy a rising market, it’s always a smart move to consider the eventual dip in the cycle that can severely cripple an investor if they are not forward-thinking in their preparation. Here are several strategies to help insulate your investments and mitigate financial fallout when the market takes a downturn.  To recession-proof your investments, consider the properties in your portfolio. Identify where you have made wise investment choices with appreciation that you can reallocate and put to better use.  Here are my recommendations on how to make that gain profitable while r ..read more

Welcome back to our seven-part series on the basic requirements of a 1031 Exchange! In our last article, we discussed the need for the Qualified Intermediary during the exchange. In this, part six, we are going to move on to title requirements. As we’ve now learned, the IRS is very detailed when it comes to the rules and regulations of a 1031 Exchange. Part of those regulations include very specific title and taxpayer requirements. Now we are going to discuss what those requirements are and the best way to avoid any title issues during the exchange. Title Requirements in a 1031 Exchange While ..read more