Did you do 1031 exchange before?

They said 40% people done.

What should be careful?

The steps of a 1031 are extremely time sensitive. Only someone with a lot of experience doing 1031s should handle the transaction. One mis step in the timing or the procedure can void the whole transaction and everything becomes taxable.

flora,

I use APIechange.com They have lots of training on their website AND someone answers the phone!

Flat fee (reasonable fee), very professional and accurate.

They are not hard but you MUST know the rules. API will help make sure you qualify.

These exchanges save me 37% taxes on each sale so basically I'm buying the replacement property at a 37% discount, even if I pay full price.

Personally I like to have the selling prop and the buying prop all lined up and close on the same day. It's not necessary to do that but it removes any deadline stress.

There is an example that if you double a penny every day at the end of the month you will have about $1,200,000. But if you double it and pay taxes on that gain that same penny is only worth about $350,000.

So allowing you to defer the money you make makes lots of sense. I have completed a 1031 in 2024. Back in 2022, I really wasn't going to go play the real estate market games with prices spiking upward. So instead of paying the high prices, I elected against doing the exchanges. My 2022 tax bill was six figures. That doesn't count the property taxes either. With those added, I payed roughly a 1/3 of mil in supporting our government that year.

In 2023, I pushed so much harder to complete 1031's. If I couldn't pick up a place subject to, I would buy an option to purchase as a plan B. I completed four exchanges that year as compared to only two the year prior. I just got my tax paperwork back from the accountant. My tax bill was less than 27% of what it was the year before. I am still not happy with the amount of property tax that I end up paying, but that is what happens when you own property.

I use 1031 Corp as they have an entire staff of individuals that can help you depending on the type of exchange you are trying to do. Most investors do just a tradition exchange, but you can do development exchanges, reverse exchanges and exchanges into different classes of real property.

The bigger question you should be asking yourself is what am I trying to do buy selling a specific asset and how will buying this replacement will complete my goal. As for me, I wanted to get more hands off and avoid the silly reindeer games the government was imposing on investors during C-19. I have bought oil wells, gas wells, a NN property, NNN properties and even a small chunk on a DST all in the past few years. The SFHs that I have picked up tend to be great grandma/grandpa homes - small ranch style houses with smaller yards on the edge of a town.

If you wish to maximize your holds, assets and minimize your taxes, a 1031 exchange is the way to go. It takes MORE WORK getting things done, but is well worth it in the long run.

One example: I purchased a SFH for $72,000 in 1978 with a $15,000 down payment. Sold it later in 1986 for $192,000, having an accommodator and not touching those funds. The next proceeds were $125,000. I then did the 1031 exchange into another SFH for $210,000, doing a re-fi and pulling out $80,000 tax free. Putting $45,000 as the down payment.

Then I sold that home in 2015 for $680,000, using those funds for another 1031 with another accommodator. I purchased an apartment property putting all of the proceeds for a down payment.

Ray, thank you for your contributions to our government, grins.

APIechange.com is a flat fee of $1000 in 2023.

I recently sold 5 fixers and rolled them into one NICE property. Add $200 for each additional property.

Brad,

Can you tell the group what happened when you sold five units and rolled them into just one? What was the impact on your cash flow, your income security and management load.

People some how think that I make up this stuff that after you achieve financial freedom the next thing you strive for is getting more years of your life back. Being a full time property manager is awesome, but if you can make at least the same amount of money and work less while having the stability of guaranteed income for the next 15 years with options for another 15 years after that is huge. Think of Lifeanire