1031 Exchanges

We are, "YOUR SOURCE FOR 1031 EXCHANGES." Contact us and learn from our years of experience. Let us simplify the process and guide you through your exchange.

Section 1031 of the Internal Revenue Code provides tax advantages to owners of appreciated investment properties.

Owner may elect to exchange their property for other like kind property without paying capital gains tax. 1031 Exchanges also protect from the 25% depreciation recapture tax.

Taxes are deferred not waived. The taxes are deferred so long as any subsequent sale is also exchanged.  If there is no subsequent exchange then the long term capital  gains tax becomes due.

Many investors plan to exchange until their death  at which time the plan is to  pass the property to the heirs on a stepped up basis. 

The definition of "like kind" is broad enough to encompass many properties so long as the properties are held for profit and not personal use.

Properly constituted fractional pieces of investment property offered through licensed security professional may qualify for exchanges. (Securitized Replacement Property)

Securitized replacement properties are offered with a comprehensive Private Placement memorandum. PPMs are required to disclose all material facts on the property and are typically far more comprehensive than conventional real estate offering material.

Fractional ownership may allow exchangers ownership in larger properties than might otherwise be possible. Larger properties may have stronger, more credit worthy tenants which may produce more stable rent streams. Larger properties may also mean larger risk and problems.

Section 1031 Exchanges have potential risks as well.  Investors should remember that there are always risks involved in real estate investing.  The 1031 Exchange process does not remove those risks.  Real estate investment risks include: rent loss, area degradation, under-insured casualty loss, building obsolescence, area competition from new developments, loss of capital, loss liability and many other factors.  Investors should also consult their tax professional advisors and consider all risks before investing.  Real estate investors may lose their investment.

1031 Exchanges may offer investor benefits but it is strongly recommended that exchangers find experienced, expert advisors such as Sourcenet Investment Services LLC.