If you’re into real estate investment, you are in a better position than a vast population. No matter how much funds you have in your savings account, real estate investment gives a different level of financial security, especially in tough times. As you know, the entire world is on the verge of lockdown because of the pandemic COVID-19. It’s not the first time that humans are at the receiving end. There have been a few other occasions in the past when mankind had to go through the same phase. And you can expect such scenarios in the future too.
What a 1031 exchange gives you?
- Regular flow of income – On investing your sale proceeds into a DST or TIC, you ensure a regular flow of income for a long time. Therefore, even in adverse situations, when everyone around you might go through a financial crunch, you won’t run out of cash.
- Opportunity to invest in bigger properties – Since you save capital gains taxes on doing a 1031 exchange, you can add the saved amount to increase your investment.
- More time to spend with your family – Being an active investor means a ton of day-to-day responsibilities. From maintaining the investment property to keeping track of the bills, you need to do all sorts of things because of which you barely give time to your family. However, you can invest your 1031 exchange proceeds into a DST or TIC and can get rid of these responsibilities and spend more time with your loved ones.
When facing an adverse situation, all the benefits mentioned above become crucial. After all, you never know when you are asked to stay at home for an indefinite time.
Complete your 1031 exchange in five easy steps –
- List your investment property for sale. Find a buyer and close the sale.
- Hire a QI and hand over the sale proceeds to him.
- Identify one or more replacement properties. Submit your identification to the IRS within 45 days.
- Speak to the seller and buy the replacement property within 180 days.
- Submit for 8824 at the time of filing taxes.
Go for a vacation, leave your worries behind.
Managing daily life could be hectic. Performing different jobs and maintaining a balance between them requires a lot of mental and physical effort. You may like to go for a short vacation to recollect yourself and take a break from the hectic schedule. A 1031 exchange can help you fulfill this dream. So, what are you waiting for?