Generally, investments are under strict tax laws. IRS always makes sure that if you make a profit, some of it is going to the Government. However, in 2004, it implements the Revenue Ruling and since then, like kind transactions are not a subject of any type of taxes. Therefore, interested businesspersons can freely exchange properties, and by using the 1031 exchange Los Angeles properties can find new owners from around the States. There are simple and complex ways of making these investments and one can become a master with a little practice and a little help from professionals. The good part about them is that they are part of the DST. Therefore, if you want to make some extra money from real estate transactions, let’s say, but you lack the time, you can use this tool to find experienced managers to handle the duties that usually fall into a landlord responsibility. However, below are some things you must know about 1031 exchange in order to have a solid base to build a business on.
The easy way to do it – Simultaneous swaps
If you are a bit familiar with this notion, you surely know that 1031 investments are in fact a swap of properties with equal estimated market values. Although you can wait a certain amount of time until you complete the transaction, you can also find an interested second party, and propose them an exchange. If they are pleased with your offer and want to proceed with the process, simultaneously exchange the properties. You as a seller won’t have to pay any income taxes and still have a new property in your portfolio.
Complex real estate transactions
If you want something new business wise, consider to swap your property with numerous others evaluated at a lower value. If together their values are the same, no Governmental body will have any objection with your investment and the IRS will won’t perceive any taxes as a result of your actions. Furthermore, if you are not already aware about this, note that “like-kind” is not a term used to determine the destination of a property. Swap a farm for a factory if that is what you think will please you in terms of business.
A team of professional might help a lot
If at any point of the process you touch the money, income taxes will apply. To make sure you avoid this to happen, hire a team of professionals will help you master the papers, the process of finding a property fit to your requirements and last but not least, not to touch the money. You can certainly use their advice, because the solid knowledge and experience in the field taught them the right approach.
If you want to make some extra money from a real estate investment, consider transactions under the 1031 rule. A team of professionals can help you master the process, avoid the taxes and manage the paperwork