Undoubtedly, not only the United States but the entire world is in chaos due to the outbreak of COVID-19. The pandemic has already taken thousands of lives and infected more than a million people. The stock market has crippled, shares prices are reeling down, and investors are finding it challenging to find an ideal investment strategy in this adverse situation. As a result, they are falling into a financial pit that looks very deep.
A 1031 exchange is what can pull you off from this financial mess.
Time and again 1031 exchange has proved to be one of the smartest investment strategies not only to save taxes but also to expand investment. As you may know, a 1031 exchange lets you defer capital gain taxes on the sale of an investment property if the sale proceeds are reinvested in another like-kind property. In simple words, you can sell a non-performing asset, invest the proceeds in a better property and defer capital gain taxes, which otherwise you would have to pay. As soon as you close on the sale of your investment property, the IRS asks you to identify one or more replacement properties within 45 days. Now, you might be thinking, how could you locate a property without getting out on the street? It’s a lockdown, after all.
You can close your 1031 exchange even without getting out of your home.
Whether you’re looking for a 1031 exchange in California, 1031 exchange in Texas, or reside in any other part of the United States, you can stay inside your home and still do a 1031 exchange. How? It’s easy, by investing in a prepackaged investment like a DST or TIC. Don’t worry. I’ll explain it. A Delaware Statutory Trust or DST is a private trust that owns, manages, and sells investment properties. DSTs have big and expensive investment properties in their portfolio. When you invest in a DST, you buy shares in one of its properties. In other words, you co-own a property along with other investors. That’s why a DST investment comes as an alternative to a 1031 exchange replacement property. A 1031 DST investment can be closed digitally. So, even when you’re not allowed to step out of your home, you don’t need to hold back from doing a 1031 exchange.
Talk to your advisor or a 1031 expert first.
No matter whether the situation is good or bad, you must plan an investment before going all out. Talking to your advisor or a 1031 exchange can help you understand the process in a better way. More importantly, it will minimize the potential financial damages that may accompany your investment.