Most real estate sellers are concerned about their windfalls from taxation. It is not an accident most investors roll their profits into new purchases by transferring their wealth via 1031 exchange. The base strategy is to close principal property sale and then close on your chosen replacement property fairly quickly. This will allow the investor to defer taxes owed until the future sale of replacement property. A sound plan to protect investor equity.

Testimonial below is from a Seattle brick n motor entrepreneur regarding a recent 1031 exchange recently completed.  

Investors at 1031 Exchange signing
A 2019 letter of recommendation from Seattle seller completing wealth transfer process with Victory Lane.

100% of the tax that would have been due on the sale, is deferred into the newly purchased property. So, the tax would be due when the new property is sold years down the road, unless a 1031 is done then also.

More than 3 properties can be identified as potential replacement properties. Working with reputable professionals is key to success in wealth protection. Contact Sam The real estate Tax Man for more expert advice regarding taxes and real estate.

 

Graphic representation of basic steps to completing proper 1031 exchange process.

For many sellers their real estate investments maybe encroaching or even past reasonable life span of a structure. It maybe unwise to continue with maintenance and improvements without considering ‘best-use” of property. Best-use may indicate knocking down existing structure and building maximum allowed by zoning codes. Definitely a job for professionals like those members you will find at Victory Lane Brokerage.

 

Repositioning

Repositioning is to determine all best uses and selecting the best one. Best use deliberation is actual construction costs necessary to attract desirable new tenants. A keen understanding of markets and clever construction applications is critical for best repositioning efforts.

Industrial

Industrial is making a comeback in demand, not for manufacturing as much, but rather logistics. Big box distribution companies need large warehouse storage and delivery facilities all across America. Some preferred locations to invest are inside urban cores and near transportation hubs like railroads, airports and shipping docks.

Offices

Office is on shaky ground in 2020. Best office investments are in the A plus category with tech companies being the most attractive tenants. Clever repositioning for B minus categories will probably be required to accommodate the newer economy.

Multi-Family

Multifamily development is normally in strong demand. Labor and materials are expensive and cover most of your development budget. To determine your investment rate of return you need to consider projected revenues. If you plan on upgrading mechanical and structural systems you must incorporate clever repositioning strategies.

Land Acquisition

Land acquisition is normally the first prelude to development. A forensic study regarding zoning, critical areas, soil conditions, etc. is necessary to ensure project compatibility.