Why You Should Invest in Medical Office Properties?

Do you know that you can acquire a medical office building for 1031 Exchange replacement property? Yes, that’s true. As 1031 Exchanges allow investors to defer capital gains taxes on exchanging like-kind properties, exchanging an old property for a medical office building isn’t a problem. But before you get carried away, it’s important that you know how beneficial it would be for you if you get hold of a medical office building using a 1031 Exchange.


Benefits of possessing Medical Office Properties

✔ Medical office buildings generally have high rents. Therefore, investors are likely to find high-credit tenants.

✔ Medical office buildings usually have a large structure.

✔ As the rents of such properties are on the high side, investors can expect greater returns

✔ Medical office building for 1031 exchange also provide numerous tax benefits.

✔ Investors can also expect equity appreciation over a period of time.

As you must be aware of the fact that real estate investments are subject to market risks, and every investment poses some risks as well. So is the case with medical office properties.

What is a 1031 Exchange?

A 1031 tax-deferred exchange allows investors to reinvest the profits from the trade of investment property in one or more replacement properties without inviting immediate federal (and most state) capital gains taxes on the appreciated value. When the sale and purchase fulfill the 1031 exchange standards, taxes are delayed until the newly procured property is sold. This deferral strategy can be duplicated through any number of exchanges until the tax liability crosses into the individual’s estate upon death.

If you opt for a 1031 Exchange in Arkansas, you should be aware of the basics. IRC Section 1031 enables an accurately structured exchange allowing any investor to trade property and reinvest the profits in a brand-new property and to put off all capital gain taxes. IRC Section 1031 (a)(1) states:

“No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like-kind which is to be held either for productive use in a trade or business or for investment.”

Drawbacks of Medical Office Properties

Sometimes, it gets difficult to find a buyer for medical office properties due to high rents.

✔ Risk of vacancy is generally high.

✔ Medical office properties have high maintenance costs.

✔ Though there are a few risks associated with medical office properties, however, there is no doubt that such properties generate high revenue. Therefore, if you were eyeing a medical office building, then it’s time that you acquire one.

For consultation and assistance regarding 1031 Exchange in Arkansas call – 888-993-0590 or email us at info@1031xchange.com

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