October 23, 2025 • 38 mins
In this conversation, Jon G. Sanchez and Cory Edge discuss the intricacies of the 1031 tax deferred exchange, a powerful tool for real estate investors to defer capital gains taxes.
They explore the mechanics of the exchange, including the importance of qualified intermediaries, the rules and timelines involved, and practical applications for investors.
The discussion also touches on current market trends, the impact of the government shutdown on real estate, and mortgage rate updates, providing listeners with a comprehensive understanding of the real estate investment landscape.
Chapters
00:00 Introduction and Market Overview
01:05 Understanding the 1031 Tax Deferred Exchange
15:25 Deep Dive into 1031 Exchange Mechanics
22:26 Understanding 1031 Exchange Deadlines
29:24 The Role of Qualified Intermediaries
34:36 Navigating the 1031 Exchange Process
42:13 Avoiding Common Pitfalls in 1031 Exchanges
👉 Watch this episode on YouTube: www.youtube.com/@thejonsanchezshow
👉 To learn more about retirement planning and wealth management in Reno, visit: sanchezgaunt.com
Compliance Disclosure: This program is for informational purposes only and should not be considered investment, tax, or legal advice. The views expressed are those of the participants and may not reflect the views of Sanchez Gaunt Capital Management. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Always consult with a qualified financial professional regarding your individual situation before making financial decisions.
They explore the mechanics of the exchange, including the importance of qualified intermediaries, the rules and timelines involved, and practical applications for investors.
The discussion also touches on current market trends, the impact of the government shutdown on real estate, and mortgage rate updates, providing listeners with a comprehensive understanding of the real estate investment landscape.
Chapters
00:00 Introduction and Market Overview
01:05 Understanding the 1031 Tax Deferred Exchange
15:25 Deep Dive into 1031 Exchange Mechanics
22:26 Understanding 1031 Exchange Deadlines
29:24 The Role of Qualified Intermediaries
34:36 Navigating the 1031 Exchange Process
42:13 Avoiding Common Pitfalls in 1031 Exchanges
👉 Watch this episode on YouTube: www.youtube.com/@thejonsanchezshow
👉 To learn more about retirement planning and wealth management in Reno, visit: sanchezgaunt.com
Compliance Disclosure: This program is for informational purposes only and should not be considered investment, tax, or legal advice. The views expressed are those of the participants and may not reflect the views of Sanchez Gaunt Capital Management. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Always consult with a qualified financial professional regarding your individual situation before making financial decisions.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
To good group.
Speaker 2 (00:06):
Good Thursday afternoon to you. Welcome to the John Sanchez
Show on News Talk seven eighty kh Wait, it's such
a pleasure to be with you, in a great pleasure
to be with one of my two normal co hosts,
mister Corey Edge of Agelaity.
Speaker 1 (00:15):
How you doing, big c I'm doing fantastic.
Speaker 2 (00:16):
How are you very well? Thank you. It's almost Friday.
It's almost fris You and I just get to sit
here and talk for the next hour.
Speaker 1 (00:24):
Just a few hours away from Friday, if you count
twelve to one.
Speaker 2 (00:28):
Exactly exactly. Mister Bellard had a function that he had
to attend to. So again, Corey and I will be
fully in the ship, as the saying goes, spaceship. That
is all right, let me tell you what we have
lined up for your we of course, we'll go through
today's stock market activity. Nice little recovery today, finally we
get a good day. We're all actually all four of
the major averages. I did pretty well overall considering everything
(00:49):
that we're facing. And then we're going to get into
a very interesting topic we haven't discussed in quite some time,
the power of the ten thirty one tax deferred exchange.
So here's the scenario, folks. Many of you may know
of this and many of you may not. And this again,
I want to tell you right from the beginning, we
are not CPAs Corey is a real estate broker. I
(01:10):
am not. But whenever we talk about tax strategies when
it comes to real estate, again, always always make sure
you run it past your attorney, your CPA, so on
and so forth, because the rules are very, very in depth,
and obviously we don't have time to get through them,
but we both do. The matter of fact, I'm right
in the middle of one for a client right now.
What if I told you there's a legal way to
(01:31):
sell an investment of property pocket your profits pay zero
tax as far as capital gains pay zero depreciation recapture
that little hidden twenty five percent tax. Always remind people
of well, at least pay for at least now for now,
for now, you're not paying those taxes. Okay. It's called
the ten thirty one TAXI for exchange, and it's really
(01:53):
one of the most powerful wealth building tools when it
comes to real estate. So what Corey and I are
going to do this afternoon is we're going to reveal
how smart investors utilize ten thirty one tax deferred exchanges
to again postpone. You're not getting out of the capital
gains tax or the depreciation recapture tax. But what you
are doing is you're postponing it. And you see, folks,
there's this great thing called the compounding effective money. Right
(02:15):
Albert Einstein said, it's the eighth wonder of the world.
So imagine if you're selling an investment property for five
hundred thousand, and if you didn't do a ten thirty
one tax deferred exchange. I don't know, Corey. Let's say
I don't know. Maybe you owed two hundred thousand in
tax on it, right, so now you're netting three hundred
thousand dollars. Do a tax deferred exchange is you're going
to find out when we go over the rules. You
have to buy an investment property like kind transfer of
(02:36):
equal or great value. That means you need to put
it into another investment property or something similar investment wise
five hundred thousand dollars or more. But now you've got
five hundred thousand dollars working for you in this new
real estate venture versus say three hundred thousand. So imagine
the compounding effect over time. Having that additional two hundred
thousand in this example, that again is one of the
(02:58):
powers of a tax defertig change at ten thirty one.
So you may not need it right now in your life,
but at some point, if you ever look to sell
a piece of your investment real estate guess what, or
sell a property in your investment real estate portfolio. This
is a strategy you want to kind of keep in
your back pocket and again decide at that point if
it's worth it now. Sometimes, of course, you run across
situations You're like, you know what. I'm sure you've had this, Corey.
(03:21):
I know I have had with clients. I'll tell them
about a ten thirty one TAXI for an exchange. You're like,
you know what, appreciate you telling me, But I'm just
going to pay the taxes and I need to profit
the money, and you know, put it in my pocket
and go on and do something else. A lot of
times they just want to get out of real estate altogether.
But Corey, I absolutely love this topic. Again, you and
I both know how powerful it is. Like I said,
(03:42):
you and I have utilized it with our clients. What's
your opinion on it? Right out of the gate.
Speaker 1 (03:47):
I think it works in a lot of situations. It
doesn't work in every single situation, but it does work
in a lot of them. One of the things I
always run across I'm sure you do too, is so
as you bring up this topic, they're like, well, my
house is worth X, and can I do I'm like, no,
investment property only. Usually that same client is holding their
house in an LLC because they don't understand liability and
all the other stuff. So investment property only. And as
(04:10):
you mentioned, if it's a long term play, if that
was a game plan from day one, and for whatever reason,
they're going to sell that property, but it's always been
long term that that money and that capital that has
grown will stay in investment property, then of course this
is a no brainer to do. I've had clients over
the years, I'm sure you have too, when they move
their base of operations. A lot of times they'll transfer
(04:31):
their properties to their base of operations for whatever reason,
or if they hear like, hey, Reno's really hot, prices
are high, but that market's a little depressed. I'm gonna
roll the dice. Sell over here, get into this market
while it's depressed. With a ten to thirty one exchange
and see if that market can make a run. So
all different ways to.
Speaker 2 (04:51):
Do across the country.
Speaker 1 (04:53):
Sure, absolutely, yeah.
Speaker 2 (04:55):
Yeah, no, And again it's a it's a it's not folks,
It's really not a not a ca complicated topic. I mean,
like anything, you can really delve deep into the rules.
We're going to course kind of give you the ten
thousand foot view of it. But the bottom line is,
like I said, it's not a complicated situation. But what
I'm working on right now with my client Corey is
he sold an investment property with a very very low
(05:15):
cost basis, like twenty five thousand dollars down in California
and got a great offer to sell it. Didn't want
to be a landlord anymore. And so would you imagine
with the capital gains tax would have been a in
California because of California, Because remember, folks, in some states
like California, you got to pay not only the federal
capital gains tax, but also a state capital gains tax.
(05:36):
Now we don't have, obviously the state capital gains tax
here in Nevada, but you know, it saved him a
lot of money. And we're going into a product that
is is a institutional level portfolio. He didn't want to
go he didn't want to be a landlord again. He
didn't want to go into a you know, another investment property.
But we have a product again where you can pool
(05:57):
your money with other investors and leave it up to
in titutional managers to go pick the property. And we're
doing a really interesting when Corey, we're going into student housing,
which I know is one of your favorites at Oklahoma University.
How's that nice?
Speaker 1 (06:12):
And their football team's doing well.
Speaker 2 (06:14):
With a deal, and I got kind of your blessing
on it. The first thing that I did is part
of my due diligence. I asked Corey and I said, Corey,
what do we have here locally? He is like, John,
there's not much for that amount of money, and so
on and so forth. So we used a structure product
and yeah, and very interesting. So I'm just in the
cobwebs Corey off of the ten thirty one strategies, having
(06:37):
to go through all the paperwork with him.
Speaker 1 (06:39):
Oh yeah, it's there. We'll get into intermediary is in
a different way. But I like the fact that you
said it's really not it sounds a lot more complicated
than it is. As long as you have a good
third party, which is called an intermediary, which we'll get into.
If you get a good, honest intermediary, they make the
whole process incredibly simple.
Speaker 2 (06:57):
Formia right, Yes, you're absolutely right. So we'll teach you
how all this strategy works. But first let's get down
to the stock market side of things. Not a significant
amount of things to really talk to you about about it.
Like I said, it was a good solid session today.
We finished up one forty four on the Dow, game
two oh one on the Nasdaq, and hire by thirty
eight on the S excuse me, thirty nine on the
(07:17):
S and P five hundred sluggish a little bit out
of the gate today. We had Tesla's numbers come in
after the close yesterday as we discussed on the program,
they started to kick into high gear a little bit.
Stock finished up decently ten dollars and twelve cents two
point three one percent to four forty nine oh nine.
Had a loss of nearly four percent earlier in the day,
as I said, but obviously came back. Las Vegas SAMs
(07:40):
was a real strong performer today, up twelve point three
nine percent again after a very strong earnings report there
pronominantly out of the Macal operations stock up six dollars
and twenty seven cents fifty six eighty nine. Navidia hired
by a dollar eighty eight one point zero four percent.
When eighty two sixteen's we saw a little bit of
action going on in the semiconductor arena. Honeywell was our
(08:03):
star performer of the data day. Use it on tennis
stock move like this qurey doubt component as I said,
fourteen dollars and six cent gained up six point eight
one percent to two twenty sixty seven, again stronger in
the court and also raised their guidance doubt component or
the company now up thirteen percent. So what we're seeing, folks,
is we're seeing a nice rotation. Right. It's not just
(08:24):
I'm not telling you, you know, we're seeing all these
major techniques just doing very very well. We're seeing this
nice rotation, right. You know, the old true names, the Honeywells,
the DAWs, those type of things, they're starting to really
attract a lot of a lot of investor money. And
that's nice to see that rotation. Probably the other highlight
today is We had some comments out of the President
overnight in regards to quantum computing, right which Jason and
(08:47):
I have discussed a bit. This is kind of the
next level of computing and so on and so forth,
and he said, eh, we're interested in taking a stake
in some of these companies. So we saw a huge
run up in these Rerighetti Computer today up twelve point
three one percent, four to zero and forty three cent
gain to forty forty nine I n Q nine point
thirty six percent gain Quantum Computing, that's the actual name
(09:09):
of the company, ten point seven percent rise, so on
and so forth. So that area was really hot, and
that of course helped out the NASDAC also speaking of
the President, said he's going to meet with President She
of course, the president of China October the thirtieth, to
discuss a potential deal covering soybeans, of rare earth metals,
nuclear weapons and all that little tiny company called TikTok.
(09:30):
He noted that he doesn't want China to face the
threats of one hundred and fifty seven percent tariffs, calling
them unsustainable, So he's going over there Corey with a
with a lot of expectation that he's going to get
a lot of deals done. Again, we're talking soybeans and
all the different things that I've mentioned, So we'll see
if that happened. But that talk again eased the pressure
a little bit here at home, you know. Other than that,
(09:50):
like I said, it was a relatively quiet day to day. Now, Corey,
guess what we actually get one economic report tomorrow. We
haven't had one in the whole entire government shutdown.
Speaker 1 (10:00):
Yeah.
Speaker 2 (10:00):
Now they called the BLS workers back to back to
the shop and we're going to have us a CPI
report tomorrow, So we'll see what that number transpires into.
What kind of impact of the markets all be covered
that of course tomorrow morning it'll be out at five
point thirty, so we'll see what happens there. But anything
else you're seeing right now, any impact real estate wise
with the government shut down, anything along those lines. From
(10:22):
a macro standpoint.
Speaker 1 (10:23):
I haven't heard too much about ill effects of the
government shutdown. I'm sure it's happening here locally, it just hasn't.
There's not enough of the fh A and USTA loans
that would would rock the market. It's just kind of
a as Dwight would mention. The rates are good, the
buyers seem okay. The market's just it's not slow, but
(10:43):
it's not fast either, right, it's just kind of trudging
alone heading into wintertime. I'm still getting a lot of
open house things and price reductions, and you know, it's
trying to find its place, right, So.
Speaker 2 (10:54):
Good, good, good, And speaking of that, we will bring
up to date. Let me we're a fresh quote for
you where we close at today since dow I said here,
we'll tell you what the thirty year mortgage did according
to Mortgage News Daily, and it was up one basis
point today on the tenure at A ye'll close of
six eighteen, So I think that's I think that's right
right where it was on Tuesday, Corey, if I remember right.
(11:15):
And fifteen year five point seventy four percent also up
one basis point for the day. And the thirty year fha,
I know do it's been talking a lot about these
five point nine one percent and the thirty year VA
five point nine to three percent, So I like seeing
those sub six numbers. We just need to get that
thirty year below sub six, and I think that'll help
things out a lot. All right, you're now up to
date in the market. Again, no economic report, so that
(11:37):
shrinks down the time that we have to talk about
the market. Let's move things over to the real estate
side and we come back the power of the ten
thirty one TAXI forird exchange. Cory and I will cover
with you at first. Let's turned over to Kristen Snow.
She is in the right now traffic center. Hello, Kristin,
Welcome back to the John Sanchez Show on News Talk
seven eighty koh with Cory Edge of Edge Reality. Do
(11:58):
iight has the afternoon off once again. We finished with
a gain of one forty four on the Dow, a
rise up two to one on the nasdak can Hire
by thirty nine, and the S and P five hundred.
All right, before we get to our topic, the power
of the ten thirty one tax DeFord exchange. Here is
the commodity side. Man and oh man, did we see
a big run up in oil prices today? Three dollars
and twenty seven cent gained sixty one seventy eight a barrel?
Once again, the President yesterday announcing sanctions that gets some
(12:20):
very large Russian oil producers. So that's why we saw
this national concern about oil prices rising, the traders bit
it up. Good day for gold. Finally come back here,
eighty dollars and eighty cent rise four forty six fifty
and ounce and up four basis points on the tenure
at a yield of three point nine to nine percent.
All right, once again, we're going to now get into
(12:41):
our topic, the power of the ten thirty one tax
deferred exchange. So, as we described at the first segment,
if you just joined us, let me tell you what
this is. Okay, So first and foremost, again, if you
are ever going to consider ten thirty one tax DeFord exchange,
make sure you get your attorney involved, make sure you
get your your CPA involved, etc. There's a lot of
(13:01):
team members that need to be involved. And you decide
to do this, but if it fits in your situation,
can be a very powerful force. Right. There are some
downsides to it, like anything else, and we're going to
lay out the pros and the cons to them. But
first of all, what is it. Where does this ten
thirty one come from? Well, that's the tax code, and
what it says is this section of the IRIS tax
Code says that investors in investment property and again you
(13:25):
cannot do this. Let me repeat, you cannot do this
with your primary residence. But if you have investment property,
you can transfer that property, so one investment property and
reinvest the proceeds and to another like kind property. And
the goal behind this whole thing is you're deferring the
capital games. You're not eliminating them, but you're deferring them. Now,
(13:47):
there is one way that you can eliminate them, but
you're not going to like the answer when I tell
you what that one is, and we'll get to that momentarily.
But the goal is is you want to defer, so
you want to go from one property to another, to
another to another and therefore never pay capital gains tax
until now. I might as well tell you until you die.
And Corey, we'll go through what happens when you die,
you get your estate gets a step to up basis,
(14:08):
and that wipes out all the capital gains tax if
you sell in the very quickly after your death, and
the price does not go up for your errors. But Corey,
let's bring this down to our second point, which is
why does this matter? Why do we want to even
consider a tax deferred exchange when it comes to our
(14:28):
investment property.
Speaker 1 (14:30):
As you mentioned in the beginning of the show, and
you go back to the compounding interest and even the
war and buffet like. It doesn't all just have to
be stucks. But at any time that you can save
and preserve your capital and keep that capital working for
you long term, it's going to compound hopefully the returns
over time. And so if instead of paying Uncle Sam
(14:52):
to your example, the one hundred thousand dollars or two
hundred thousand, whatever it was, if we can keep that
working for another ten, twelve, twenty years, whatever you want,
call it it just I don't want to say it
gooses the returns, but it helps the returns along versus
taking a tax.
Speaker 2 (15:08):
Fit right exactly. And once again the key, of course
is you'll find out here you have to buy something
of equal or greater value. Now let's go to our
third point, Corey, which is the eligible properties, because this
is where you need somebody of experience. Again one of
the team members called a qualified intermediary or a QI
as we call them. They can help you with this
(15:28):
along with your CPA, etc. So a lot of people
think that you if you let's say, for example, you
have a single family rental and you want to do
ten thirty one TAXI for exchange that you have to
buy another single family rental. And that's not the case, Corey.
You can go to like kind properties, which is you
can actually go from a single family rental to a
commercial lot or to a commercial building.
Speaker 1 (15:50):
Expand on that, Chris correct, like kind. So in the
world of real estate, think of like kind as anything
most of the time real estate related raw land, commercial properties,
multi family properties, trailer parks, really all the stuff that
we've talked about on the show over the years of
different types of real estate investments, most of them are
(16:10):
going to be like kind. If you get into a
different kind of ownership structure, that's where you want to
make sure the intermediary may be able to help, but
the tax accountant is the main person that'll be able
to say, wow, I don't know about that. Because one
of the things that everybody has to remember on these
Let's say you and I own a property and it's
John Corey LLC. Well, if we want to do a
(16:31):
ten thirty one exchange and John Corey LLC sells the property,
John Corey LLC has to purchase the new property. So
John and Corey got to be on the same page
because if one wants one thing and the other one
wants another, the ten thirty one may not work. There
are very complex ten thirty one ways to make that
(16:53):
work in a partnership, but things have to be set up.
I would say, I'm not an accountant, but I would
say at least a year maybe two years ahead of
the sale to make sure that it goes the right way.
But for the main point, whatever entity is selling is
the same entity with all the players that has to be.
Speaker 2 (17:12):
Buying, absolutely, and it also well we'll talk about if
you have some debt on the property also because then
colities the water is a little bit. So we'll touch
on that in just a second. Okay, So like time
properties again, big misconception, you got to go single family, renineral,
single foundly real not the case, and I should mention also,
and we're not going to get into it today, but
(17:32):
you can also do ten thirty one tax defert exchanges
with businesses. Right, So if you have a business that
you want to sell, and again you have a capital
gain that you normally would be assessed because you know
the business has gone up the value and whatever the
assets et cetera. You can also talk to your account
about doing a ten thirty one taxi for an exchange
for that also, but again a whole other topic. So
(17:53):
now let's go back to the real estate side. Okay,
now let's go to point number four. Now, as I
said at the beginning, there are a lot of rules
that you need to follow in very stringent rules. There's
no jeez, I'm sorry I missed that deadline. You know,
please forgive me irs that type of thing. They are
very very stringent rules. And the first rule that we
wanted to mention is the forty five one eighty rule. Cory,
(18:15):
go right ahead.
Speaker 1 (18:16):
So from the time we sell again, let's use the
example that you want to sell your property, Say Kory,
I want to sell it. We're going to do this.
I'm really interested in this ten thirty one exchange. You
need to let your broker know ahead of time before
you sell the property, that this is what you're thinking
of doing, because that broker then has to go out
and say, okay, we need to go find stuff or
start looking at other things. Because the clock, the forty
(18:39):
five day and the one to eighty day rule, which
I'll get into that clock starts ticking the minute the
property that you already own closes escrow, it's called the
relinquished property. So from that relinquished date, the day you
close escro on that property you already own, you have
forty five days to identify in writing on the forms
(19:00):
up to three other properties that you are going to purchase,
and then from that day you have one hundred and
eighty days back to the relinquishment time, one hundred and
eighty days from the time that original properties sold to
close scrow on one of those properties. You don't have
to buy all three, but you have to close escrow
on one of those. And if during that time, the
(19:23):
time between the forty five days and the one eighty
if you change your mind tough you haven't identified, then
the other property you can't buy it. A lot of
times when I do these, we want to, if possible,
identify and close within the forty five days, because I've
had clients before that have gone out and identified in
forty five days, don't get around the closing, and by
(19:46):
the time they try to, they haven't even written a contract.
Those properties are sold. Now you're you're you know, soll
excuse my language. There's all these little nuances in it too.
If you identify more than three properties, you have to
on every property you've identified, So you've got to be
careful and to remember, you can close on as many
(20:08):
as you want, as long as.
Speaker 2 (20:08):
Its identify five the maximum.
Speaker 1 (20:12):
Oh, I don't know if that I've never Maybe it
is I've always I've always kept it a three and under,
knowing that if I go three, well, knowing that if
I go four or more, now we've got to buy
all of them otherwise the whole thing gets blown up.
But I've never looked at the amount that you can
max identify.
Speaker 2 (20:30):
If you will. And let's I'm no.
Speaker 1 (20:34):
I was just gonna say, so two very important dates.
Forty five days from the closive escrow of the property
you're selling, and one and eighty days from closive escrow
of the property you're selling.
Speaker 2 (20:45):
Yes, exactly. And what I was gonna say, Corey, those
are calendar days. It's not working our business days. It
doesn't matter if there's holidays, it's pure calendar days. So
those are your two critical deadlines. As I said, going
into this point, you can't go to your We'll talk
about when we come back from the break. The other
member of the team that has to be involved in
a ten thirty one, called the qualified intermediary. You can't
(21:07):
go cry in the blues to them say hey, it
was on vacation, I forgot about the forty five days
or one hundred and eighty or anything like that. So
there is no forgiving on that, or you could blow
the entire ten thirty one taxift exchange. So very critical.
Forty five to one. Those are the two main time
periods you need to remember. When we come back, we're
gonna go to point number five, which is we're talking
about the team members. So you have your real estate
(21:29):
agent on one side or both sides of the deal.
As Corey said, just to reiterate, you have to let
that agent know you want to do a ten thirty one. Now, Corey,
remember in the old days, use the real estate profession
will have to check a box in the on the
MLS listing the content sales contract. Excuse me indicating you
were going to do a ten thirty one. Is that
(21:50):
still the case where you have to physically put it?
Speaker 1 (21:53):
No? Okay, well no, no, you do have to disclose it.
But our current contracts have it already written in there's
not even a baron no longer in the body of it.
Speaker 2 (22:02):
Okay, very good. Yes, And we've had that happen before.
I've had people, and I'm sure you have Corey people.
You know, they're getting real close to Escrow, like like
a couple of days and they they're going, hey, well
you know what I matter of fact, I had one
a couple of years ago, literally two days away from Escrow,
and he calls up and he goes, hey, you know,
I want to do this ten thirty one exchange into
this package product. And I'm like, uh, when you're closing.
(22:24):
He goes, oh, in two days, and through grace of luck,
he was able to go back and talk to the
seller or talk to the buyer and they were able
to maneuver some dates and he was able to get
it done. But you don't want to be putting everybody
into that situation, right, So let everybody know right up
from so you've got the real estate professionals both sides
or one side. You have normal Escrow right looks and
(22:47):
smells this like a normal Escrow. But again, you have
to notify Escrow you're going to do a ten thirty one.
Why because when we come back. There's a third party
that's evolved called a QI, better known as a qualified intermediary.
We'll explain what their role is in the ten thirty
one tax deferd exchange process. I really started over to
Jack Saban, he's got news traffic on weather Elojic. Welcome
(23:09):
back to the John Sanchez Show on Newstalk seven eighty.
Ko waits joined by Corey Edge of Agrality to White
has the afternoon off once again. We finished with a
game of one four on the Dow, up two one
on the Nasdaq, and hire by thirty nine of the
S and P five hundred. All right, we're helping you
with some real estate strategies, right. The tax deferred strategy
is better known as a ten thirty one tax deferred exchange.
All right, let's recap what we've touched on so far. Corey,
(23:31):
what is it? Well? Once again, ten thirty one is
the IRS code that allows investors again this is only
investment property, to sell one investment property and reinvest the
proceeds into another light kind property, thereby deferring the capital gains.
And Corey, you know you and I know this is
this is a pet peet for both of US. I
find even CPAs forget to tell their clients when they're
(23:52):
talking about tax strategies. When it comes to investment in
real estate. I call it it's my own little term.
It's no official term. The gotcha tax, the depreciate recapture tax. Right.
How many times people come back and go, oh my god,
you know I just sold my property and you know
I did a you know, I knew what my capital
gains was, but then I got hit with this depreciation
recapture tax. Right. It's just always forgotten, don't you agree?
Speaker 1 (24:15):
Well, and it's so funny because I get clients I'm
sure you do too, and they're like, I owe two hundred,
it's worth five hundred, So I should get a check
for three hundred thousand when it's done, and then I'll
get to do whatever I want with it. I think
you're forgetting a few things here, like the federal government
and all the other stuffy.
Speaker 2 (24:32):
Yeah, that's right.
Speaker 1 (24:33):
So in federal Yeah, talk to the accounts.
Speaker 2 (24:36):
Yep. We've got to change to the capital games rules
or rates, I should say, starting next year. So make
sure if you're going to do this in twenty twenty six,
you check with your account on the on the rules,
because remember it's not not just a flat twenty percent,
it's actually if you make again whole another subject, you know,
below a certain amount, whether you're single or joint, you
can actually have a zero capital gains tax. So that's
(24:57):
why it's very important to talk with your accountant before
you this because a lot of times you may go,
you may fall into say the ten percent capital gains tax,
and then kind of you kind of go, hm, I
really want to miss with doing at ten thirty one
or do I just want to pay ten percent capital
gains tax and have that capital to go do whatever
you want. So don't think it's another misconception. Don't think
you're always just going to pay a flat twenty percent.
(25:19):
For those in higher income brackets, gets what you get
to add on about another what three point three percent, Corey,
so you can be up to twenty three point three
percent capital gains tax. And again, if you're doing this
in a state, and Corey, while talking about a state,
let's give our listeners a little bit of a warning
because obviously we both have clients in California. People always
think that California or they don't realize California has their
(25:42):
own capital gains tax. I believe that one if I
remember correctly. I didn't look it up before the show,
but I think maybe you know five and a half
percent I think is the max California capital gains tax.
I can look it up the next break, but thanks
right around that five percent mark.
Speaker 1 (25:55):
Yeah, I try to stay away, so I have no
idea what it is because I don't want to know
what it is.
Speaker 2 (26:00):
Yeah, and then yeah, hold another set of rules and
they can actually withhold some of your proceeds to send
it to the irs ahead of time, and so on
and so forth. So again, what is the ten thirty
one TAXI for an exchange? And you're again deferring your
capital gains tax as well as your depreciation recapture tax.
And I should explain what was depreciation recapture? So when
(26:20):
you have a rental property, you've, hopefully your accountan has
depreciated that asset over the life. Where we at corey
twenty nine and a half years right on investment commercial
thirty nine thirty five, thirty nine and a half somewhere
around there, it's a little bit more the longer depreciation schedule.
But anyways, they'd appreciate it. Plus some of the furniture
(26:42):
and fixture of meaning that's not really the correct word.
Some of the infrastructure of the property they've appreciated. So
that's so they got to come back and go, Okay, Corey,
you wrote off one hundred thousand dollars of depreciation over
the twenty years you've owned this property. Guess what you
get to pay a twenty five percent tax. It's not
use it on that full hundred thousand in this example,
(27:02):
but a good portion of that bottom line. A lot
of people forget about it, and again I've had many
accounts completely forget to tell their clients, and it's a
big shotcome tax time. So just be careful about that one,
all right. So that's what it is. Why it matters again,
we want to be able to take as much money
as we can when we sell it an investment property
and move it into another property, so that we have
more money working for us instead of losing money to taxes.
(27:23):
We talked about the eligible property again, things like rental homes,
commercial properties, land, even vacation rentals. If it's income producing,
you got to be really careful on the vacation rental one.
And then lastly we touched on the forty five to
one to eighty rule, which is again from the day
that property closes, you have forty five days to identify
up to three properties. If you get into some of
the package products, you can actually go that was wrong.
(27:46):
It's not up to five properties to identify. It's actually
an unlimited amount as long as it does not exceed
two hundred percent of the sales price of your property
that you just sold. So again that's a whole nother
rule there, or we'll call these packaged products. But forty
five days to identify up to three properties and one
hundred and eighty days too close, no ins if ans
(28:08):
or butts about it. And then last week before we
went to break, we said, okay, you got a lot
of team members, right, You got your CPA, you may
get in an attorney involved with it, you have your
real estate professionals, you have your ESCRO company. Wow, there's
already four people right there. Now, who's the fifth one?
A QI or a qualified intermediary? Corey, let's go down
this path.
Speaker 1 (28:27):
So, in the world of a ten thirty one exchange,
the qualified intermediary is the most important person. Not that
they they'll give you some general advice on the structure.
They're not accountants, they're not this or that. They're gonna
tey to go see your lawyer or your account if you
have specific questions. But one of the most important things
and I get this, I guess i'ven't had this in
(28:47):
quite a while. I'm sure you've gotten it too. People
will call and say, hey, I just sold my property.
I'm interested in the ten thirty one exchange. Can you
explain it? Like, if you sold the propriety, it's too late.
It's over. As soon as that title is done and
it's sold, the clock has already run. And so what
the intermediary, and you have to use an intermediary. What
the intermediary is going to do? And the reason the
(29:08):
little blurb is in our sales contracts is they are
basically going to get assigned to the rights of that contract.
Are you still have title companies yourself? All those but
in the eyes of the irs, the intermediary is the
one that makes sure that you don't have what they
call constructive receipt of the funds, the money that you're
making off of the relinquishment or the sale of that property.
(29:31):
Can never touch your bank account. You can't use it
for anything. It has to go into the qualified intermediarrea
in qualified intermediary through the contract assignment, and then they
will turn around and buy the new property via contract
assignment with those funds. You don't touch it. You can't.
(29:51):
The minute you touch that money, it's over. You're paying taxes,
whether you like it or not.
Speaker 2 (29:55):
Exactly, and so they are go ahead.
Speaker 1 (30:00):
I was just gonna say, so they are the most
at least in the eyes of a ten three much change.
They are the most important person in the transaction.
Speaker 2 (30:07):
And be careful who you select. There are some kind
of fly by night qis out there. Stick with some
of the big names, a lot of the right query.
A lot of the reputable escro companies have a QI division.
Speaker 1 (30:19):
So what I would say, I don't stay on my
soapbox too long. But here in Reno, there's a couple
of smaller companies that have been doing this forever. You
can look up their references, you can tell how long
they've been in business. Anybody that it's a very weird
deal because they're kind of quasi license, but not as
much as you would think. There was an instance a
(30:40):
few years ago, which is kind of now blown up
but still ongoing, where some local scammers were doing, believe
or not, hundreds of millions of dollars of these things.
They had set up their own intermediary, and when the
whole thing blew up, the money was gone, all gone,
and people had exchanged into other properties and they weren't
legitimate exchanges because the intermediary wasn't legitimate. And I don't
(31:04):
know what's happened with those sales, John, but I was
told by a couple of attorneys, the IRS will come
in and unwind those. You will pay tax on that.
Even if you had no idea, you got scammed. So
stick with the reputable companies.
Speaker 2 (31:16):
Yes, indeed, yes, indeed. Okay, so's real quickly before we
go to break, Let's give you a quick example. So
I sell an investment property for say five hundred thousand dollars.
I want to do a ten thirty one taxifert exchange.
Corey's marked on the contract. We're all good. Corey then
fills out a identification form saying here's the three properties
John is identifying for his ten thirty one exchange. Corey
(31:37):
then is my real estate agent, links me up with
a qualified intermediary. ESCRO closes, let's say it's the first
of October. ESCRO closes that five hundred thousand dollars does
not go from my title company to me against Corey said,
I cannot touch one penny of it. So what they do.
Escro then wires the money to the QI. Okay, so
the QI has the money. Some of them will pay interest,
(31:58):
some of them won't. That's something you want to ask about.
Now we fast forward and Corey finds my next property.
I find another rental property I want to buy for
say six hundred thousand, so no problem. Corey then closes
that transaction on the sale price for the six hundred thousand.
He notifies the QI. The QI then wires the money
to the new escrow company or maybe it's the same
(32:18):
as the first one, but whires the money to the
escrow company, and then it's done. You will get tax reporting,
you know, from the QI as well as your ESCRO company.
So you do get it ten ninety nine's and there's
some certain tax forms that have to be filed. That's
why you want to get your CPA involved with it.
But it's really from that standpoint, it's really simple, right, Corey.
Speaker 1 (32:36):
Yeah, it all happens behind the scenes and without getting
too complicated. In the middle of all this, your sale
agreement on the property selling will get assigned to the intermediary.
When you go to buy a property, that purchase agreement
will get a signed to the intermediary. So that's how
they're able to help sell, hold the cash and help purchase.
(32:58):
And it's again it's all to make one of these
things work correctly, and it's at the end of the
day to make sure that you don't touch the money.
And then when they're done, they're done. They charge a fee.
Obviously it's worth every penny of your self. It blows
my mind that people will save hundreds of thousands of dollars,
but they will find the cheapest qy they can, you know,
in the yellow pages, because they don't want to spend
(33:20):
five dollars extra. Right, So go with the reputable people.
Speaker 2 (33:24):
And last point, then we got to run roll late here.
Let's say we sell that property for a five hundred thousand,
but actually let's do a different number. Let's say Corey
sold the property for five hundred and fifty thousand, but
with his commission and various escro fees, et cetera. The
net proceeds are five hundred thousand. That's what I have
to ten thirty one exchange the five hundred thousand. I
don't have to do it on the five hundred and
fifty thousand. Correct.
Speaker 1 (33:46):
And you got to go up in debt as well.
If you had debt on there, you got to go up.
Speaker 2 (33:49):
A whole other issue. That's really tricky there. All right,
we've got a few more points in the tax ten
thirty one taxi for exchange strategy. Let's wrap it up
with Christen Snow the right now traffic center Chris did.
Speaker 1 (34:02):
Of the sale.
Speaker 2 (34:04):
Yeah, welcome back to the John Sanchez Show on News
Talk seven eighty koh, mister Edge, your phone number.
Speaker 1 (34:08):
Serve six seven three six seven zero zero beautiful.
Speaker 2 (34:13):
All right, and let me dig up mister Millard's phone number.
I should have had that already to go seven seven
five of course, two for zero twenty twenty two. You
think I have that one memorized? Corey? All right, we're
talking about the ten thirty one taxi for an exchange.
Now let's continue down our points. Corey, see if we
can get this wrapped up now, you mentioned this incredible
nasty word called boot. Not a boot in the butt,
(34:33):
but it kind of is in a sense. Number six,
we want to avoid boot. What is boot? That is
any cash or debt relief that you receive during the
exchange which becomes taxable and you don't want it, explain Corey.
Speaker 1 (34:47):
Correct. Yeah, so you tend if you sell something for
five hundred thousand, the rule is you got to spend
five hundred and one thousand. And if we won't get
into it, but if you have debt, then you got
to go up in debt. If for some reason and
you're like, you know what, I only want to spend
four hundred thousand, I'm going to keep one hundred thousand,
you can still do that, but you're going to get
taxed on one hundred thousand clearly, and also with debt,
(35:11):
and we won't go into all the details, but you
have to go up in debt. If that property was
carrying one hundred thousand in debt, you got to go
one hundred and one thousand in debt or one hundred
and a penny. I guess you can call it if
you go backwards. The difference showing backwards could be considered boot.
And you would get taxed on it. So the QI
will help you with those they'll give you the numbers,
but a CPA will help you with different strategies if
(35:33):
you're not sure what those numbers should be. If that
makes sense.
Speaker 2 (35:36):
Exactly, great point. Okay, number seven we touch on this.
We can just kind of skip over this. You got
to trade out, not down again. Sold property for five hundred,
you got to get something worth more than five hundred thousand.
Leveraging strategy, I think is our eighth point. Corey. Use
the ten thirty ones to move from active management like
single rentals to passive income family, multi family commercials, the
(36:00):
package products and things like that. And that's where we
see it with our clients, right, they're just tired of
being landlords. They don't want to do it anymore. They
don't you know, not that they have any problem with
real estate, they just don't want to be that landlord anymore.
So again, going into package institutional, package products, multi families,
things like that with a property manager, it just seems
to fit that new stage of their life correct.
Speaker 1 (36:22):
And to clarify, like when we were talking about in
the beginning, if you have a single family rental, but
you can go pick up a four plex for this,
you know, and still make the numbers work. You can
do that. You can also go from multiple single family
rentals into a big building. You can go from a
big building into multiple single family rentals. So they're all
like kind just depends how much dirt, yeah, and even
(36:44):
dirt yeah. And so there's you can go any way
you want. And to this point, if you have a
bunch of properties and they're kind of aheadqu yeah, you
could go into one building. It's one manager, it's one roof,
it's all these things that may might make your life
easier if you have it all figured out asolutely.
Speaker 2 (37:00):
All right, Last than the legacy planning. Again, when you
inherit the property, you're meaning your errors. When they inherit
the property, you get a stepped up basis that wipes
out all of these tax deferred game. So you could
have done, you know whatever, five ten thirty different tax
deferred exchanges over your life. You pass away, and maybe
your original cost basis was one hundred and now it's
ten million value of your real estate. Guess what, all
(37:22):
those taxes they're all wiped out. But unfortunately you got
a die to do that. So most common mistakes. You
missed deadlines, you choose the wrong intermediary, you mix personal
on investment property. Just don't do that. Talk to your
team as symbol a great team, and uh hopefully the
ten thirty one works out well for you. It's a
great strategy, Corey, thanks for bringing to our attention.
Speaker 1 (37:40):
Absolutely, keep good records.
Speaker 2 (37:42):
Absolutely all right, God bless everybody. We'll be back with
you tomorrow the John Sanchez Show. Have a great afternoon. DWAIGHTE.
Millard n MLSID Number two four one two five nine
a license mortgage loan officer with Highlands Residential Mortgage Limited
and Equal Housing Lender n mlsid Number one three four
eight seven one. The information shared on this live broadcast
is for general information purposes only and does not constitute
(38:04):
financial or mortgage advice. Listeners should consult directly with a
licensed mortgage professional for guidance tailored to their specific situation.
All loans are subject to credit approval and program guidelines.
Not all applicants will qualify. Loan terms in availability may
vary by state and are subject to change without notice.
Highlands Residential Mortgage Limited is licensed in multiple states. For
(38:25):
a full list of state licenses and disclosures, Please visit
https slash slash www dot highlandsmortgage dot com backslash licenses backslash.
The views express during this program are their own and
do not necessarily reflect those of Highlands Residential Mortgage Limited,
To good group.
Speaker 2 (00:06):
Good Thursday afternoon to you. Welcome to the John Sanchez
Show on News Talk seven eighty kh Wait, it's such
a pleasure to be with you, in a great pleasure
to be with one of my two normal co hosts,
mister Corey Edge of Agelaity.
Speaker 1 (00:15):
How you doing, big c I'm doing fantastic.
Speaker 2 (00:16):
How are you very well? Thank you. It's almost Friday.
It's almost fris You and I just get to sit
here and talk for the next hour.
Speaker 1 (00:24):
Just a few hours away from Friday, if you count
twelve to one.
Speaker 2 (00:28):
Exactly exactly. Mister Bellard had a function that he had
to attend to. So again, Corey and I will be
fully in the ship, as the saying goes, spaceship. That
is all right, let me tell you what we have
lined up for your we of course, we'll go through
today's stock market activity. Nice little recovery today, finally we
get a good day. We're all actually all four of
the major averages. I did pretty well overall considering everything
(00:49):
that we're facing. And then we're going to get into
a very interesting topic we haven't discussed in quite some time,
the power of the ten thirty one tax deferred exchange.
So here's the scenario, folks. Many of you may know
of this and many of you may not. And this again,
I want to tell you right from the beginning, we
are not CPAs Corey is a real estate broker. I
(01:10):
am not. But whenever we talk about tax strategies when
it comes to real estate, again, always always make sure
you run it past your attorney, your CPA, so on
and so forth, because the rules are very, very in depth,
and obviously we don't have time to get through them,
but we both do. The matter of fact, I'm right
in the middle of one for a client right now.
What if I told you there's a legal way to
(01:31):
sell an investment of property pocket your profits pay zero
tax as far as capital gains pay zero depreciation recapture
that little hidden twenty five percent tax. Always remind people
of well, at least pay for at least now for now,
for now, you're not paying those taxes. Okay. It's called
the ten thirty one TAXI for exchange, and it's really
(01:53):
one of the most powerful wealth building tools when it
comes to real estate. So what Corey and I are
going to do this afternoon is we're going to reveal
how smart investors utilize ten thirty one tax deferred exchanges
to again postpone. You're not getting out of the capital
gains tax or the depreciation recapture tax. But what you
are doing is you're postponing it. And you see, folks,
there's this great thing called the compounding effective money. Right
(02:15):
Albert Einstein said, it's the eighth wonder of the world.
So imagine if you're selling an investment property for five
hundred thousand, and if you didn't do a ten thirty
one tax deferred exchange. I don't know, Corey. Let's say
I don't know. Maybe you owed two hundred thousand in
tax on it, right, so now you're netting three hundred
thousand dollars. Do a tax deferred exchange is you're going
to find out when we go over the rules. You
have to buy an investment property like kind transfer of
(02:36):
equal or great value. That means you need to put
it into another investment property or something similar investment wise
five hundred thousand dollars or more. But now you've got
five hundred thousand dollars working for you in this new
real estate venture versus say three hundred thousand. So imagine
the compounding effect over time. Having that additional two hundred
thousand in this example, that again is one of the
(02:58):
powers of a tax defertig change at ten thirty one.
So you may not need it right now in your life,
but at some point, if you ever look to sell
a piece of your investment real estate guess what, or
sell a property in your investment real estate portfolio. This
is a strategy you want to kind of keep in
your back pocket and again decide at that point if
it's worth it now. Sometimes, of course, you run across
situations You're like, you know what. I'm sure you've had this, Corey.
(03:21):
I know I have had with clients. I'll tell them
about a ten thirty one TAXI for an exchange. You're like,
you know what, appreciate you telling me, But I'm just
going to pay the taxes and I need to profit
the money, and you know, put it in my pocket
and go on and do something else. A lot of
times they just want to get out of real estate altogether.
But Corey, I absolutely love this topic. Again, you and
I both know how powerful it is. Like I said,
(03:42):
you and I have utilized it with our clients. What's
your opinion on it? Right out of the gate.
Speaker 1 (03:47):
I think it works in a lot of situations. It
doesn't work in every single situation, but it does work
in a lot of them. One of the things I
always run across I'm sure you do too, is so
as you bring up this topic, they're like, well, my
house is worth X, and can I do I'm like, no,
investment property only. Usually that same client is holding their
house in an LLC because they don't understand liability and
all the other stuff. So investment property only. And as
(04:10):
you mentioned, if it's a long term play, if that
was a game plan from day one, and for whatever reason,
they're going to sell that property, but it's always been
long term that that money and that capital that has
grown will stay in investment property, then of course this
is a no brainer to do. I've had clients over
the years, I'm sure you have too, when they move
their base of operations. A lot of times they'll transfer
(04:31):
their properties to their base of operations for whatever reason,
or if they hear like, hey, Reno's really hot, prices
are high, but that market's a little depressed. I'm gonna
roll the dice. Sell over here, get into this market
while it's depressed. With a ten to thirty one exchange
and see if that market can make a run. So
all different ways to.
Speaker 2 (04:51):
Do across the country.
Speaker 1 (04:53):
Sure, absolutely, yeah.
Speaker 2 (04:55):
Yeah, no, And again it's a it's a it's not folks,
It's really not a not a ca complicated topic. I mean,
like anything, you can really delve deep into the rules.
We're going to course kind of give you the ten
thousand foot view of it. But the bottom line is,
like I said, it's not a complicated situation. But what
I'm working on right now with my client Corey is
he sold an investment property with a very very low
(05:15):
cost basis, like twenty five thousand dollars down in California
and got a great offer to sell it. Didn't want
to be a landlord anymore. And so would you imagine
with the capital gains tax would have been a in
California because of California, Because remember, folks, in some states
like California, you got to pay not only the federal
capital gains tax, but also a state capital gains tax.
(05:36):
Now we don't have, obviously the state capital gains tax
here in Nevada, but you know, it saved him a
lot of money. And we're going into a product that
is is a institutional level portfolio. He didn't want to
go he didn't want to be a landlord again. He
didn't want to go into a you know, another investment property.
But we have a product again where you can pool
(05:57):
your money with other investors and leave it up to
in titutional managers to go pick the property. And we're
doing a really interesting when Corey, we're going into student housing,
which I know is one of your favorites at Oklahoma University.
How's that nice?
Speaker 1 (06:12):
And their football team's doing well.
Speaker 2 (06:14):
With a deal, and I got kind of your blessing
on it. The first thing that I did is part
of my due diligence. I asked Corey and I said, Corey,
what do we have here locally? He is like, John,
there's not much for that amount of money, and so
on and so forth. So we used a structure product
and yeah, and very interesting. So I'm just in the
cobwebs Corey off of the ten thirty one strategies, having
(06:37):
to go through all the paperwork with him.
Speaker 1 (06:39):
Oh yeah, it's there. We'll get into intermediary is in
a different way. But I like the fact that you
said it's really not it sounds a lot more complicated
than it is. As long as you have a good
third party, which is called an intermediary, which we'll get into.
If you get a good, honest intermediary, they make the
whole process incredibly simple.
Speaker 2 (06:57):
Formia right, Yes, you're absolutely right. So we'll teach you
how all this strategy works. But first let's get down
to the stock market side of things. Not a significant
amount of things to really talk to you about about it.
Like I said, it was a good solid session today.
We finished up one forty four on the Dow, game
two oh one on the Nasdaq, and hire by thirty
eight on the S excuse me, thirty nine on the
(07:17):
S and P five hundred sluggish a little bit out
of the gate today. We had Tesla's numbers come in
after the close yesterday as we discussed on the program,
they started to kick into high gear a little bit.
Stock finished up decently ten dollars and twelve cents two
point three one percent to four forty nine oh nine.
Had a loss of nearly four percent earlier in the day,
as I said, but obviously came back. Las Vegas SAMs
(07:40):
was a real strong performer today, up twelve point three
nine percent again after a very strong earnings report there
pronominantly out of the Macal operations stock up six dollars
and twenty seven cents fifty six eighty nine. Navidia hired
by a dollar eighty eight one point zero four percent.
When eighty two sixteen's we saw a little bit of
action going on in the semiconductor arena. Honeywell was our
(08:03):
star performer of the data day. Use it on tennis
stock move like this qurey doubt component as I said,
fourteen dollars and six cent gained up six point eight
one percent to two twenty sixty seven, again stronger in
the court and also raised their guidance doubt component or
the company now up thirteen percent. So what we're seeing, folks,
is we're seeing a nice rotation. Right. It's not just
(08:24):
I'm not telling you, you know, we're seeing all these
major techniques just doing very very well. We're seeing this
nice rotation, right. You know, the old true names, the Honeywells,
the DAWs, those type of things, they're starting to really
attract a lot of a lot of investor money. And
that's nice to see that rotation. Probably the other highlight
today is We had some comments out of the President
overnight in regards to quantum computing, right which Jason and
(08:47):
I have discussed a bit. This is kind of the
next level of computing and so on and so forth,
and he said, eh, we're interested in taking a stake
in some of these companies. So we saw a huge
run up in these Rerighetti Computer today up twelve point
three one percent, four to zero and forty three cent
gain to forty forty nine I n Q nine point
thirty six percent gain Quantum Computing, that's the actual name
(09:09):
of the company, ten point seven percent rise, so on
and so forth. So that area was really hot, and
that of course helped out the NASDAC also speaking of
the President, said he's going to meet with President She
of course, the president of China October the thirtieth, to
discuss a potential deal covering soybeans, of rare earth metals,
nuclear weapons and all that little tiny company called TikTok.
(09:30):
He noted that he doesn't want China to face the
threats of one hundred and fifty seven percent tariffs, calling
them unsustainable, So he's going over there Corey with a
with a lot of expectation that he's going to get
a lot of deals done. Again, we're talking soybeans and
all the different things that I've mentioned, So we'll see
if that happened. But that talk again eased the pressure
a little bit here at home, you know. Other than that,
(09:50):
like I said, it was a relatively quiet day to day. Now, Corey,
guess what we actually get one economic report tomorrow. We
haven't had one in the whole entire government shutdown.
Speaker 1 (10:00):
Yeah.
Speaker 2 (10:00):
Now they called the BLS workers back to back to
the shop and we're going to have us a CPI
report tomorrow, So we'll see what that number transpires into.
What kind of impact of the markets all be covered
that of course tomorrow morning it'll be out at five
point thirty, so we'll see what happens there. But anything
else you're seeing right now, any impact real estate wise
with the government shut down, anything along those lines. From
(10:22):
a macro standpoint.
Speaker 1 (10:23):
I haven't heard too much about ill effects of the
government shutdown. I'm sure it's happening here locally, it just hasn't.
There's not enough of the fh A and USTA loans
that would would rock the market. It's just kind of
a as Dwight would mention. The rates are good, the
buyers seem okay. The market's just it's not slow, but
(10:43):
it's not fast either, right, it's just kind of trudging
alone heading into wintertime. I'm still getting a lot of
open house things and price reductions, and you know, it's
trying to find its place, right, So.
Speaker 2 (10:54):
Good, good, good, And speaking of that, we will bring
up to date. Let me we're a fresh quote for
you where we close at today since dow I said here,
we'll tell you what the thirty year mortgage did according
to Mortgage News Daily, and it was up one basis
point today on the tenure at A ye'll close of
six eighteen, So I think that's I think that's right
right where it was on Tuesday, Corey, if I remember right.
(11:15):
And fifteen year five point seventy four percent also up
one basis point for the day. And the thirty year fha,
I know do it's been talking a lot about these
five point nine one percent and the thirty year VA
five point nine to three percent, So I like seeing
those sub six numbers. We just need to get that
thirty year below sub six, and I think that'll help
things out a lot. All right, you're now up to
date in the market. Again, no economic report, so that
(11:37):
shrinks down the time that we have to talk about
the market. Let's move things over to the real estate
side and we come back the power of the ten
thirty one TAXI forird exchange. Cory and I will cover
with you at first. Let's turned over to Kristen Snow.
She is in the right now traffic center. Hello, Kristin,
Welcome back to the John Sanchez Show on News Talk
seven eighty koh with Cory Edge of Edge Reality. Do
(11:58):
iight has the afternoon off once again. We finished with
a gain of one forty four on the Dow, a
rise up two to one on the nasdak can Hire
by thirty nine, and the S and P five hundred.
All right, before we get to our topic, the power
of the ten thirty one tax DeFord exchange. Here is
the commodity side. Man and oh man, did we see
a big run up in oil prices today? Three dollars
and twenty seven cent gained sixty one seventy eight a barrel?
Once again, the President yesterday announcing sanctions that gets some
(12:20):
very large Russian oil producers. So that's why we saw
this national concern about oil prices rising, the traders bit
it up. Good day for gold. Finally come back here,
eighty dollars and eighty cent rise four forty six fifty
and ounce and up four basis points on the tenure
at a yield of three point nine to nine percent.
All right, once again, we're going to now get into
(12:41):
our topic, the power of the ten thirty one tax
deferred exchange. So, as we described at the first segment,
if you just joined us, let me tell you what
this is. Okay, So first and foremost, again, if you
are ever going to consider ten thirty one tax DeFord exchange,
make sure you get your attorney involved, make sure you
get your your CPA involved, etc. There's a lot of
(13:01):
team members that need to be involved. And you decide
to do this, but if it fits in your situation,
can be a very powerful force. Right. There are some
downsides to it, like anything else, and we're going to
lay out the pros and the cons to them. But
first of all, what is it. Where does this ten
thirty one come from? Well, that's the tax code, and
what it says is this section of the IRIS tax
Code says that investors in investment property and again you
(13:25):
cannot do this. Let me repeat, you cannot do this
with your primary residence. But if you have investment property,
you can transfer that property, so one investment property and
reinvest the proceeds and to another like kind property. And
the goal behind this whole thing is you're deferring the
capital games. You're not eliminating them, but you're deferring them. Now,
(13:47):
there is one way that you can eliminate them, but
you're not going to like the answer when I tell
you what that one is, and we'll get to that momentarily.
But the goal is is you want to defer, so
you want to go from one property to another, to
another to another and therefore never pay capital gains tax
until now. I might as well tell you until you die.
And Corey, we'll go through what happens when you die,
you get your estate gets a step to up basis,
(14:08):
and that wipes out all the capital gains tax if
you sell in the very quickly after your death, and
the price does not go up for your errors. But Corey,
let's bring this down to our second point, which is
why does this matter? Why do we want to even
consider a tax deferred exchange when it comes to our
(14:28):
investment property.
Speaker 1 (14:30):
As you mentioned in the beginning of the show, and
you go back to the compounding interest and even the
war and buffet like. It doesn't all just have to
be stucks. But at any time that you can save
and preserve your capital and keep that capital working for
you long term, it's going to compound hopefully the returns
over time. And so if instead of paying Uncle Sam
(14:52):
to your example, the one hundred thousand dollars or two
hundred thousand, whatever it was, if we can keep that
working for another ten, twelve, twenty years, whatever you want,
call it it just I don't want to say it
gooses the returns, but it helps the returns along versus
taking a tax.
Speaker 2 (15:08):
Fit right exactly. And once again the key, of course
is you'll find out here you have to buy something
of equal or greater value. Now let's go to our
third point, Corey, which is the eligible properties, because this
is where you need somebody of experience. Again one of
the team members called a qualified intermediary or a QI
as we call them. They can help you with this
(15:28):
along with your CPA, etc. So a lot of people
think that you if you let's say, for example, you
have a single family rental and you want to do
ten thirty one TAXI for exchange that you have to
buy another single family rental. And that's not the case, Corey.
You can go to like kind properties, which is you
can actually go from a single family rental to a
commercial lot or to a commercial building.
Speaker 1 (15:50):
Expand on that, Chris correct, like kind. So in the
world of real estate, think of like kind as anything
most of the time real estate related raw land, commercial properties,
multi family properties, trailer parks, really all the stuff that
we've talked about on the show over the years of
different types of real estate investments, most of them are
(16:10):
going to be like kind. If you get into a
different kind of ownership structure, that's where you want to
make sure the intermediary may be able to help, but
the tax accountant is the main person that'll be able
to say, wow, I don't know about that. Because one
of the things that everybody has to remember on these
Let's say you and I own a property and it's
John Corey LLC. Well, if we want to do a
(16:31):
ten thirty one exchange and John Corey LLC sells the property,
John Corey LLC has to purchase the new property. So
John and Corey got to be on the same page
because if one wants one thing and the other one
wants another, the ten thirty one may not work. There
are very complex ten thirty one ways to make that
(16:53):
work in a partnership, but things have to be set up.
I would say, I'm not an accountant, but I would
say at least a year maybe two years ahead of
the sale to make sure that it goes the right way.
But for the main point, whatever entity is selling is
the same entity with all the players that has to be.
Speaker 2 (17:12):
Buying, absolutely, and it also well we'll talk about if
you have some debt on the property also because then
colities the water is a little bit. So we'll touch
on that in just a second. Okay, So like time
properties again, big misconception, you got to go single family, renineral,
single foundly real not the case, and I should mention also,
and we're not going to get into it today, but
(17:32):
you can also do ten thirty one tax defert exchanges
with businesses. Right, So if you have a business that
you want to sell, and again you have a capital
gain that you normally would be assessed because you know
the business has gone up the value and whatever the
assets et cetera. You can also talk to your account
about doing a ten thirty one taxi for an exchange
for that also, but again a whole other topic. So
(17:53):
now let's go back to the real estate side. Okay,
now let's go to point number four. Now, as I
said at the beginning, there are a lot of rules
that you need to follow in very stringent rules. There's
no jeez, I'm sorry I missed that deadline. You know,
please forgive me irs that type of thing. They are
very very stringent rules. And the first rule that we
wanted to mention is the forty five one eighty rule. Cory,
(18:15):
go right ahead.
Speaker 1 (18:16):
So from the time we sell again, let's use the
example that you want to sell your property, Say Kory,
I want to sell it. We're going to do this.
I'm really interested in this ten thirty one exchange. You
need to let your broker know ahead of time before
you sell the property, that this is what you're thinking
of doing, because that broker then has to go out
and say, okay, we need to go find stuff or
start looking at other things. Because the clock, the forty
(18:39):
five day and the one to eighty day rule, which
I'll get into that clock starts ticking the minute the
property that you already own closes escrow, it's called the
relinquished property. So from that relinquished date, the day you
close escro on that property you already own, you have
forty five days to identify in writing on the forms
(19:00):
up to three other properties that you are going to purchase,
and then from that day you have one hundred and
eighty days back to the relinquishment time, one hundred and
eighty days from the time that original properties sold to
close scrow on one of those properties. You don't have
to buy all three, but you have to close escrow
on one of those. And if during that time, the
(19:23):
time between the forty five days and the one eighty
if you change your mind tough you haven't identified, then
the other property you can't buy it. A lot of
times when I do these, we want to, if possible,
identify and close within the forty five days, because I've
had clients before that have gone out and identified in
forty five days, don't get around the closing, and by
(19:46):
the time they try to, they haven't even written a contract.
Those properties are sold. Now you're you're you know, soll
excuse my language. There's all these little nuances in it too.
If you identify more than three properties, you have to
on every property you've identified, So you've got to be
careful and to remember, you can close on as many
(20:08):
as you want, as long as.
Speaker 2 (20:08):
Its identify five the maximum.
Speaker 1 (20:12):
Oh, I don't know if that I've never Maybe it
is I've always I've always kept it a three and under,
knowing that if I go three, well, knowing that if
I go four or more, now we've got to buy
all of them otherwise the whole thing gets blown up.
But I've never looked at the amount that you can
max identify.
Speaker 2 (20:30):
If you will. And let's I'm no.
Speaker 1 (20:34):
I was just gonna say, so two very important dates.
Forty five days from the closive escrow of the property
you're selling, and one and eighty days from closive escrow
of the property you're selling.
Speaker 2 (20:45):
Yes, exactly. And what I was gonna say, Corey, those
are calendar days. It's not working our business days. It
doesn't matter if there's holidays, it's pure calendar days. So
those are your two critical deadlines. As I said, going
into this point, you can't go to your We'll talk
about when we come back from the break. The other
member of the team that has to be involved in
a ten thirty one, called the qualified intermediary. You can't
(21:07):
go cry in the blues to them say hey, it
was on vacation, I forgot about the forty five days
or one hundred and eighty or anything like that. So
there is no forgiving on that, or you could blow
the entire ten thirty one taxift exchange. So very critical.
Forty five to one. Those are the two main time
periods you need to remember. When we come back, we're
gonna go to point number five, which is we're talking
about the team members. So you have your real estate
(21:29):
agent on one side or both sides of the deal.
As Corey said, just to reiterate, you have to let
that agent know you want to do a ten thirty one. Now, Corey,
remember in the old days, use the real estate profession
will have to check a box in the on the
MLS listing the content sales contract. Excuse me indicating you
were going to do a ten thirty one. Is that
(21:50):
still the case where you have to physically put it?
Speaker 1 (21:53):
No? Okay, well no, no, you do have to disclose it.
But our current contracts have it already written in there's
not even a baron no longer in the body of it.
Speaker 2 (22:02):
Okay, very good. Yes, And we've had that happen before.
I've had people, and I'm sure you have Corey people.
You know, they're getting real close to Escrow, like like
a couple of days and they they're going, hey, well
you know what I matter of fact, I had one
a couple of years ago, literally two days away from Escrow,
and he calls up and he goes, hey, you know,
I want to do this ten thirty one exchange into
this package product. And I'm like, uh, when you're closing.
(22:24):
He goes, oh, in two days, and through grace of luck,
he was able to go back and talk to the
seller or talk to the buyer and they were able
to maneuver some dates and he was able to get
it done. But you don't want to be putting everybody
into that situation, right, So let everybody know right up
from so you've got the real estate professionals both sides
or one side. You have normal Escrow right looks and
(22:47):
smells this like a normal Escrow. But again, you have
to notify Escrow you're going to do a ten thirty one.
Why because when we come back. There's a third party
that's evolved called a QI, better known as a qualified intermediary.
We'll explain what their role is in the ten thirty
one tax deferd exchange process. I really started over to
Jack Saban, he's got news traffic on weather Elojic. Welcome
(23:09):
back to the John Sanchez Show on Newstalk seven eighty.
Ko waits joined by Corey Edge of Agrality to White
has the afternoon off once again. We finished with a
game of one four on the Dow, up two one
on the Nasdaq, and hire by thirty nine of the
S and P five hundred. All right, we're helping you
with some real estate strategies, right. The tax deferred strategy
is better known as a ten thirty one tax deferred exchange.
All right, let's recap what we've touched on so far. Corey,
(23:31):
what is it? Well? Once again, ten thirty one is
the IRS code that allows investors again this is only
investment property, to sell one investment property and reinvest the
proceeds into another light kind property, thereby deferring the capital gains.
And Corey, you know you and I know this is
this is a pet peet for both of US. I
find even CPAs forget to tell their clients when they're
(23:52):
talking about tax strategies. When it comes to investment in
real estate. I call it it's my own little term.
It's no official term. The gotcha tax, the depreciate recapture tax. Right.
How many times people come back and go, oh my god,
you know I just sold my property and you know
I did a you know, I knew what my capital
gains was, but then I got hit with this depreciation
recapture tax. Right. It's just always forgotten, don't you agree?
Speaker 1 (24:15):
Well, and it's so funny because I get clients I'm
sure you do too, and they're like, I owe two hundred,
it's worth five hundred, So I should get a check
for three hundred thousand when it's done, and then I'll
get to do whatever I want with it. I think
you're forgetting a few things here, like the federal government
and all the other stuffy.
Speaker 2 (24:32):
Yeah, that's right.
Speaker 1 (24:33):
So in federal Yeah, talk to the accounts.
Speaker 2 (24:36):
Yep. We've got to change to the capital games rules
or rates, I should say, starting next year. So make
sure if you're going to do this in twenty twenty six,
you check with your account on the on the rules,
because remember it's not not just a flat twenty percent,
it's actually if you make again whole another subject, you know,
below a certain amount, whether you're single or joint, you
can actually have a zero capital gains tax. So that's
(24:57):
why it's very important to talk with your accountant before
you this because a lot of times you may go,
you may fall into say the ten percent capital gains tax,
and then kind of you kind of go, hm, I
really want to miss with doing at ten thirty one
or do I just want to pay ten percent capital
gains tax and have that capital to go do whatever
you want. So don't think it's another misconception. Don't think
you're always just going to pay a flat twenty percent.
(25:19):
For those in higher income brackets, gets what you get
to add on about another what three point three percent, Corey,
so you can be up to twenty three point three
percent capital gains tax. And again, if you're doing this
in a state, and Corey, while talking about a state,
let's give our listeners a little bit of a warning
because obviously we both have clients in California. People always
think that California or they don't realize California has their
(25:42):
own capital gains tax. I believe that one if I
remember correctly. I didn't look it up before the show,
but I think maybe you know five and a half
percent I think is the max California capital gains tax.
I can look it up the next break, but thanks
right around that five percent mark.
Speaker 1 (25:55):
Yeah, I try to stay away, so I have no
idea what it is because I don't want to know
what it is.
Speaker 2 (26:00):
Yeah, and then yeah, hold another set of rules and
they can actually withhold some of your proceeds to send
it to the irs ahead of time, and so on
and so forth. So again, what is the ten thirty
one TAXI for an exchange? And you're again deferring your
capital gains tax as well as your depreciation recapture tax.
And I should explain what was depreciation recapture? So when
(26:20):
you have a rental property, you've, hopefully your accountan has
depreciated that asset over the life. Where we at corey
twenty nine and a half years right on investment commercial
thirty nine thirty five, thirty nine and a half somewhere
around there, it's a little bit more the longer depreciation schedule.
But anyways, they'd appreciate it. Plus some of the furniture
(26:42):
and fixture of meaning that's not really the correct word.
Some of the infrastructure of the property they've appreciated. So
that's so they got to come back and go, Okay, Corey,
you wrote off one hundred thousand dollars of depreciation over
the twenty years you've owned this property. Guess what you
get to pay a twenty five percent tax. It's not
use it on that full hundred thousand in this example,
(27:02):
but a good portion of that bottom line. A lot
of people forget about it, and again I've had many
accounts completely forget to tell their clients, and it's a
big shotcome tax time. So just be careful about that one,
all right. So that's what it is. Why it matters again,
we want to be able to take as much money
as we can when we sell it an investment property
and move it into another property, so that we have
more money working for us instead of losing money to taxes.
(27:23):
We talked about the eligible property again, things like rental homes,
commercial properties, land, even vacation rentals. If it's income producing,
you got to be really careful on the vacation rental one.
And then lastly we touched on the forty five to
one to eighty rule, which is again from the day
that property closes, you have forty five days to identify
up to three properties. If you get into some of
the package products, you can actually go that was wrong.
(27:46):
It's not up to five properties to identify. It's actually
an unlimited amount as long as it does not exceed
two hundred percent of the sales price of your property
that you just sold. So again that's a whole nother
rule there, or we'll call these packaged products. But forty
five days to identify up to three properties and one
hundred and eighty days too close, no ins if ans
(28:08):
or butts about it. And then last week before we
went to break, we said, okay, you got a lot
of team members, right, You got your CPA, you may
get in an attorney involved with it, you have your
real estate professionals, you have your ESCRO company. Wow, there's
already four people right there. Now, who's the fifth one?
A QI or a qualified intermediary? Corey, let's go down
this path.
Speaker 1 (28:27):
So, in the world of a ten thirty one exchange,
the qualified intermediary is the most important person. Not that
they they'll give you some general advice on the structure.
They're not accountants, they're not this or that. They're gonna
tey to go see your lawyer or your account if you
have specific questions. But one of the most important things
and I get this, I guess i'ven't had this in
(28:47):
quite a while. I'm sure you've gotten it too. People
will call and say, hey, I just sold my property.
I'm interested in the ten thirty one exchange. Can you
explain it? Like, if you sold the propriety, it's too late.
It's over. As soon as that title is done and
it's sold, the clock has already run. And so what
the intermediary, and you have to use an intermediary. What
the intermediary is going to do? And the reason the
(29:08):
little blurb is in our sales contracts is they are
basically going to get assigned to the rights of that contract.
Are you still have title companies yourself? All those but
in the eyes of the irs, the intermediary is the
one that makes sure that you don't have what they
call constructive receipt of the funds, the money that you're
making off of the relinquishment or the sale of that property.
(29:31):
Can never touch your bank account. You can't use it
for anything. It has to go into the qualified intermediarrea
in qualified intermediary through the contract assignment, and then they
will turn around and buy the new property via contract
assignment with those funds. You don't touch it. You can't.
(29:51):
The minute you touch that money, it's over. You're paying taxes,
whether you like it or not.
Speaker 2 (29:55):
Exactly, and so they are go ahead.
Speaker 1 (30:00):
I was just gonna say, so they are the most
at least in the eyes of a ten three much change.
They are the most important person in the transaction.
Speaker 2 (30:07):
And be careful who you select. There are some kind
of fly by night qis out there. Stick with some
of the big names, a lot of the right query.
A lot of the reputable escro companies have a QI division.
Speaker 1 (30:19):
So what I would say, I don't stay on my
soapbox too long. But here in Reno, there's a couple
of smaller companies that have been doing this forever. You
can look up their references, you can tell how long
they've been in business. Anybody that it's a very weird
deal because they're kind of quasi license, but not as
much as you would think. There was an instance a
(30:40):
few years ago, which is kind of now blown up
but still ongoing, where some local scammers were doing, believe
or not, hundreds of millions of dollars of these things.
They had set up their own intermediary, and when the
whole thing blew up, the money was gone, all gone,
and people had exchanged into other properties and they weren't
legitimate exchanges because the intermediary wasn't legitimate. And I don't
(31:04):
know what's happened with those sales, John, but I was
told by a couple of attorneys, the IRS will come
in and unwind those. You will pay tax on that.
Even if you had no idea, you got scammed. So
stick with the reputable companies.
Speaker 2 (31:16):
Yes, indeed, yes, indeed. Okay, so's real quickly before we
go to break, Let's give you a quick example. So
I sell an investment property for say five hundred thousand dollars.
I want to do a ten thirty one taxifert exchange.
Corey's marked on the contract. We're all good. Corey then
fills out a identification form saying here's the three properties
John is identifying for his ten thirty one exchange. Corey
(31:37):
then is my real estate agent, links me up with
a qualified intermediary. ESCRO closes, let's say it's the first
of October. ESCRO closes that five hundred thousand dollars does
not go from my title company to me against Corey said,
I cannot touch one penny of it. So what they do.
Escro then wires the money to the QI. Okay, so
the QI has the money. Some of them will pay interest,
(31:58):
some of them won't. That's something you want to ask about.
Now we fast forward and Corey finds my next property.
I find another rental property I want to buy for
say six hundred thousand, so no problem. Corey then closes
that transaction on the sale price for the six hundred thousand.
He notifies the QI. The QI then wires the money
to the new escrow company or maybe it's the same
(32:18):
as the first one, but whires the money to the
escrow company, and then it's done. You will get tax reporting,
you know, from the QI as well as your ESCRO company.
So you do get it ten ninety nine's and there's
some certain tax forms that have to be filed. That's
why you want to get your CPA involved with it.
But it's really from that standpoint, it's really simple, right, Corey.
Speaker 1 (32:36):
Yeah, it all happens behind the scenes and without getting
too complicated. In the middle of all this, your sale
agreement on the property selling will get assigned to the intermediary.
When you go to buy a property, that purchase agreement
will get a signed to the intermediary. So that's how
they're able to help sell, hold the cash and help purchase.
(32:58):
And it's again it's all to make one of these
things work correctly, and it's at the end of the
day to make sure that you don't touch the money.
And then when they're done, they're done. They charge a fee.
Obviously it's worth every penny of your self. It blows
my mind that people will save hundreds of thousands of dollars,
but they will find the cheapest qy they can, you know,
in the yellow pages, because they don't want to spend
(33:20):
five dollars extra. Right, So go with the reputable people.
Speaker 2 (33:24):
And last point, then we got to run roll late here.
Let's say we sell that property for a five hundred thousand,
but actually let's do a different number. Let's say Corey
sold the property for five hundred and fifty thousand, but
with his commission and various escro fees, et cetera. The
net proceeds are five hundred thousand. That's what I have
to ten thirty one exchange the five hundred thousand. I
don't have to do it on the five hundred and
fifty thousand. Correct.
Speaker 1 (33:46):
And you got to go up in debt as well.
If you had debt on there, you got to go up.
Speaker 2 (33:49):
A whole other issue. That's really tricky there. All right,
we've got a few more points in the tax ten
thirty one taxi for exchange strategy. Let's wrap it up
with Christen Snow the right now traffic center Chris did.
Speaker 1 (34:02):
Of the sale.
Speaker 2 (34:04):
Yeah, welcome back to the John Sanchez Show on News
Talk seven eighty koh, mister Edge, your phone number.
Speaker 1 (34:08):
Serve six seven three six seven zero zero beautiful.
Speaker 2 (34:13):
All right, and let me dig up mister Millard's phone number.
I should have had that already to go seven seven
five of course, two for zero twenty twenty two. You
think I have that one memorized? Corey? All right, we're
talking about the ten thirty one taxi for an exchange.
Now let's continue down our points. Corey, see if we
can get this wrapped up now, you mentioned this incredible
nasty word called boot. Not a boot in the butt,
(34:33):
but it kind of is in a sense. Number six,
we want to avoid boot. What is boot? That is
any cash or debt relief that you receive during the
exchange which becomes taxable and you don't want it, explain Corey.
Speaker 1 (34:47):
Correct. Yeah, so you tend if you sell something for
five hundred thousand, the rule is you got to spend
five hundred and one thousand. And if we won't get
into it, but if you have debt, then you got
to go up in debt. If for some reason and
you're like, you know what, I only want to spend
four hundred thousand, I'm going to keep one hundred thousand,
you can still do that, but you're going to get
taxed on one hundred thousand clearly, and also with debt,
(35:11):
and we won't go into all the details, but you
have to go up in debt. If that property was
carrying one hundred thousand in debt, you got to go
one hundred and one thousand in debt or one hundred
and a penny. I guess you can call it if
you go backwards. The difference showing backwards could be considered boot.
And you would get taxed on it. So the QI
will help you with those they'll give you the numbers,
but a CPA will help you with different strategies if
(35:33):
you're not sure what those numbers should be. If that
makes sense.
Speaker 2 (35:36):
Exactly, great point. Okay, number seven we touch on this.
We can just kind of skip over this. You got
to trade out, not down again. Sold property for five hundred,
you got to get something worth more than five hundred thousand.
Leveraging strategy, I think is our eighth point. Corey. Use
the ten thirty ones to move from active management like
single rentals to passive income family, multi family commercials, the
(36:00):
package products and things like that. And that's where we
see it with our clients, right, they're just tired of
being landlords. They don't want to do it anymore. They
don't you know, not that they have any problem with
real estate, they just don't want to be that landlord anymore.
So again, going into package institutional, package products, multi families,
things like that with a property manager, it just seems
to fit that new stage of their life correct.
Speaker 1 (36:22):
And to clarify, like when we were talking about in
the beginning, if you have a single family rental, but
you can go pick up a four plex for this,
you know, and still make the numbers work. You can
do that. You can also go from multiple single family
rentals into a big building. You can go from a
big building into multiple single family rentals. So they're all
like kind just depends how much dirt, yeah, and even
(36:44):
dirt yeah. And so there's you can go any way
you want. And to this point, if you have a
bunch of properties and they're kind of aheadqu yeah, you
could go into one building. It's one manager, it's one roof,
it's all these things that may might make your life
easier if you have it all figured out asolutely.
Speaker 2 (37:00):
All right, Last than the legacy planning. Again, when you
inherit the property, you're meaning your errors. When they inherit
the property, you get a stepped up basis that wipes
out all of these tax deferred game. So you could
have done, you know whatever, five ten thirty different tax
deferred exchanges over your life. You pass away, and maybe
your original cost basis was one hundred and now it's
ten million value of your real estate. Guess what, all
(37:22):
those taxes they're all wiped out. But unfortunately you got
a die to do that. So most common mistakes. You
missed deadlines, you choose the wrong intermediary, you mix personal
on investment property. Just don't do that. Talk to your
team as symbol a great team, and uh hopefully the
ten thirty one works out well for you. It's a
great strategy, Corey, thanks for bringing to our attention.
Speaker 1 (37:40):
Absolutely, keep good records.
Speaker 2 (37:42):
Absolutely all right, God bless everybody. We'll be back with
you tomorrow the John Sanchez Show. Have a great afternoon. DWAIGHTE.
Millard n MLSID Number two four one two five nine
a license mortgage loan officer with Highlands Residential Mortgage Limited
and Equal Housing Lender n mlsid Number one three four
eight seven one. The information shared on this live broadcast
is for general information purposes only and does not constitute
(38:04):
financial or mortgage advice. Listeners should consult directly with a
licensed mortgage professional for guidance tailored to their specific situation.
All loans are subject to credit approval and program guidelines.
Not all applicants will qualify. Loan terms in availability may
vary by state and are subject to change without notice.
Highlands Residential Mortgage Limited is licensed in multiple states. For
(38:25):
a full list of state licenses and disclosures, Please visit
https slash slash www dot highlandsmortgage dot com backslash licenses backslash.
The views express during this program are their own and
do not necessarily reflect those of Highlands Residential Mortgage Limited,
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