April 30 – I hope you’re doing well inside your home. As you can understand the gravity of the situation, you must not step out of your home for the safety of your family and others. However, what about the financial crunch that investors all across the country are facing? You, too, might find yourself among them. Undoubtedly, the current pandemic has caused a lot of damage to the economy of not only the United States but the entire world. Stocks, bonds, real estate investment, shares, and so on, everything that could make money has gone down significantly. In this adverse situation, the challenge is not to fall into the financial pit. But how to do that?
Look for a reliable investment option, something like a 1031 exchange.
Though you might not want to engage in any investment at this point in time, however, it’s the only thing that can see you through this financial crunch. Even when you’re standing against the tides, a 1031 exchange can help you reach the shore. As you might know, a 1031 exchange lets you defer capital gain taxes on reinvesting the sale proceeds into like-kind property. All you need to do is identify a new investment option, similar to your previous investment property, and buy it within 180 days. The IRS gives you 45 days to come up with an identification. Now, you must be wondering, how could you identify a property in this lockdown situation, and that too, in so little less time? Well, the recent IRS notice might bring a smile to your face. Due to COVID-19, the IRS has recently made a change in the 1031 exchange timeline. If you’re in the middle of your 1031 exchange or have started a 1031 exchange after April 4, you will get an extension on the deadlines. So, there is no pressure to close the identification within 45 days. You can stretch it to the mid of July.
Choose a prepackaged investment like DST, NNN, or TIC, to close your 1031 exchange.
There are handsome chances that you still not be able to locate an ideal replacement property even after getting an extension from the IRS. Therefore, it’s better to look for a prepackaged investment that doesn’t require you to get out on the street and locate a property. A DST investment is the best suitable option for this. A DST or Delaware Statutory Trust is a private trust that owns, operates, and manages investment properties. DSTs are prepackaged investment options and can be closed digitally. Since DSTs qualify for a 1031 exchange, you can take this advantage and close your 1031 exchange. Similarly, you can invest in TIC properties or go with an NNN investment.
The crux of the matter is to close your 1031 exchange without stepping outside and keep your investment moving. After all, time is the only constant. Just like good days, the bad ones won’t last forever. So, all you need to do is choose one investment at this point in time that can help you avoid a financial setback.