Question: "My question is about 1031 exchange. How do I keep my depreciation going?"
A 1031 exchange is basically where you defer your taxes. A lot of people advertise it as tax-free, but it isn't. You still have to pay your taxes. A 1031 exchange says you don't have to pay them now, but instead, you can pay them later.
Let's say you bought a house and flipped it. You sold it and made $100,000. You can either pay the taxes on this $100,000 or you can say you're going to do a 1031 exchange. Therefore, you roll those proceeds into your next property.
To do this you have outline three properties in your contract and close on them in 90-180 days. You already have to have three properties dedicated to this before you do a 1031 exchange. If you don't close on one of them, you lose your 1031 exchange abilities.
You defer the taxes of your $100,000 onto one of the three properties that you outlined.
Listen to the She Buys It Podcast as Whitney explains a 1031 exchange in more detail and lets you know what to watch out for.
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