Episode #15 – Real Estate 1031 Exchange Benefits

Find out how to move real estate investment profit into the next investment property.

Under Internal Revenue Code section 1031, a taxpayer may defer recognition of capital gains and related federal income tax on the exchange of certain property types. The process is called a 1031 exchange.

Garry Barnes interviews a 1031 exchange veteran, Trent Hendry from Mountain View Title & Escrow. Trent shares insider tips from his 21 years of experience helping investors take advantage of this option.

In the case of a Real Estate 1031 exchange, an owner sells investment property then buy another property and defer federal capital gains tax. Proceeds from the sale are moved into the purchase of the new property.

Both commercial and residential properties qualify for 1031 exchange if they are defined as investment property. Another criterion is that the property must be replaced with one of equal or greater value to take advantage of the federal 1031 exchange. How to kick federal taxable event to the next investment property.

During this process an intermediary is required. Learn what an intermediary is and what they do in this process that’s different than the exchanger and escrow company.

The 1031 exchange may not always be an option for investors. This is a federal government tax code subject to change and has been a point of conversation to remove under the Biden administration.

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