What is a 1031 exchange? How can participating in a 1031 exchange benefit you in your real estate investing business? We get these questions consistently, so today’s guest is here to help! Lance Growth is the Business Development Manager at Asset Exchange Company, and he is a 1031 exchange expert!
On this episode, Lance is clarifying what a 1031 exchange is, and how you can use it to explode your real estate portfolio! We’re digging deep into all the details of 1031 exchanges, including the legal details, and specific, real life examples. Lance has an abundance of knowledge on this topic; don’t miss this episode of Investing in Real Estate!
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Lance explains that a 1031 exchange is a tax deferral program that allows an individual to defer capital gains on real estate. At Asset Exchange Company, Lance and his team serve as a qualified intermediary. A qualified intermediary is more commonly known as an accommodator.
An accommodator plays a critical role in the process of 1031 exchanges, as they facilitate the transaction. They prepare all of the legal documents, and provide guidelines to all parties involved in the exchange. They ensure that everyone is in compliance with the IRS in order to guarantee a successful exchange.
In real estate, a 1031 exchange permits the investor to sell a real estate property and then reinvest the funds in a property of equal or greater value. Doing so allows the investor to defer all capital gains taxes. Lance posits that in real estate investing, most investors utilize a 1031 exchange when they want to diversify their portfolio.
Although a 1031 exchange might seem complicated, Lance posits that at Asset Exchange Company, the majority of the exchanges they facilitate are simple. After working on over 25,000 exchanges, they understand all the rules and regulations. Asset Exchange Company also provides a free audit service, since many of their team members are lawyers.
On today’s show, Lance is sharing the four basic guidelines of a 1031 exchange. He’s sharing all the details about the process, including the types of properties that qualify, and the timelines that exist within the transaction. We’ll also talk about specific complications, like what happens when a property is owned by an LLC, or how to conduct a 1031 exchange within a house hacking scenario.
We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- Can you conduct a 1031 exchange on your primary residence?
- What is a reverse return, and how does it work?
- What are the two options for identifying the new property in an exchange?
- What are the rules regarding using a 1031 exchange for a vacation home?
- Why did Congress enact 1031 exchanges?
- And much more about real estate investing!