As promised in Part One, here are the next five (5) most common myths of the 1031 Exchange. If you missed Part 1, you can read it here.
The next most common, rounding out the Top Ten:
• I can use my Attorney, CPA or broker to act as my accommodator.
While some of these pros may be “able” even “qualified”, however, if they have served you in a financial capacity, then they are ineligible. Let the experts so what the experts do best, hire a Qualified Intermediary (QI).
• You must exchange into a property that is in the same state that I am selling in.
You can purchase an exchange property anywhere in the United States and only the United States.
• Vacant land does not apply.
As long as it is intended for or being used as income property, then it qualifies.
• Investment Property requires too much maintenance.
It is no wonder The Absolute Net Lease is just one of many types of investment options that provide zero management to the property owner.
• It is bad for the US Economy.
Why Repealing the 1031 Makes No Sense
This last one becomes even more common during election years because of political platforming and I refuse to discuss politics here, however, to even consider repealing this tax code is irresponsible because it’s one of the few tax vehicles that actually stimulates the economy. There are many examples that I can point to, but the easiest one for all to understand happens to be one of the most popular reasons people exchange in the first place, which is typically selling their property due to it being too high maintenance or because of lots of deferred maintenance or even many times both! When this property on ourselves and older property with deferred maintenance, that typically goes to an investor who are adding to their portfolio, who will then come in and upgrade or even reposition The asset which will require city permits provide work for the construction trades and ultimately create more revenue that will certainly increase sales tax for that municipality. And that’s just one simple example, never mind the reinvestment of all that capital every year, all of which make it pretty easy to see that repealing the 1031 tax code makes absolutely no sense at all, in my opinion of course!
Education and Planning Are Key
Keep in mind that there are at least another 40 plus myths, rumors, lies and untruths out there. The most concerning to me is that 1031s are too scary. The only instance where this proves to be true, is when there is the lack of planning and unfortunately, that has a lot to do with why more than 60% of exchanges fail.
This is my “WHY”
It is why I am committed to the education of the investment property community about the true power of the Tax Deferred 1031 Exchange. Our elder investors are entitled to the wealth that they have earned! This is just one way to help them preserve it even build it if they choose.
If you are an investment property owner who is interested in a no obligation, private consultation, please visit Best1031Online.com, or contact:
James Bean of SVN-Rich Investment Real Estate Partners, CA DRE# 01970580
james.bean @ svn.com
If you are an agent/broker, I am happy to discuss strategies with you on how to best serve your next listing client in preparing them for a successful exchange.
Don’t know what certain terms mean? Click here for a Glossary of Terms
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