Can a 1031 exchange benefit my retirement options?

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Real Estate

How can a 1031 exchange benefit my retirement options?

When you think of retirement, do you think of flowing blue waters, sun-kissed skin, and warm waters tickling your feet? Or, maybe you prefer a space up in the mountains, enjoyments of the land, and the limitless yields of the green earth itself. Either way, there's a way to retire in the place of your dreams, and it allows you to continue earning passive cash flow from your investments. Because, although the daily work may stop, earning should always continue.

What if I told you that you could expand your investment portfolio to your retirement area by doing what you enjoy best? Investing.

Ask any investor why they decided to add real estate to their portfolio, and the answers will be along the lines of wealth building or estate planning for heirs. The reality is that land is the best investment we can make, and there isn't any more being added to this rock we live on.

As for tying your investments to your retirement goals, It's simple. Investment properties are everywhere, and diversification of your portfolio through buying and selling is one of the most effective ways to meet your goals. 

However, don't just sell an investment property and bypass the tax advantages that can help leverage the next purchase. Instead, maximize your purchase power while deferring capital gains by 30-45%. Also, stay true to the core benefits of investing estate planning for your heirs while diversifying your portfolio and boosting your cash flow. 

So, how can this be accomplished precisely?

What is a 1031 Exchange?

Besides being the key to accelerating your investment goals, it is the way to achieve the above. 

A 1031 exchange is the process of selling a qualified property and replacing it with an equal real estate asset. Still, there are a couple of things to remember and rules to play by when using this method. Before you get started, it is necessary to partner with a tax advisor to help complete the process.

  • Always disclose the intent to use a 1031 exchange with your listing agent and the buyer's agent. The completion of this process requires the buyer's cooperation.
  • Locate your new qualified property within 45 days of escrow closing. 
  • Open escrow on the new property and inform your tax advisor.
  • Confirm your replacement property or properties with a 45-day identification form
  • Update your exchange coordinator of the opened escrow of the replacement property.

The 1031 exchange method is used nationwide, including the U.S Virgin Islands. Just like that, your retirement plan became a little clearer.

Are you looking to sell an investment property and possibly considering the 1031 exchange method? We should talk. National 1031 Exchange Services is a qualified exchange partner who works as an intercessor between the parties to accomplish the primary goal.  

Check out my last blog post about retirement here.

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