The 1031 Exchange is the most common tool used to manage Capital Gains Taxes. Although there are benefits, we find that the rules, restrictions, and deadlines far exceed the upside.
Pressure to Identify & Purchase a Replacement Property
There are two critical dates that must be met in a 1031 Exchange transaction. The seller of the relinquished property must identify a replacement property within 45 days when that property transfers to a Buyer. Secondly, the purchase of that identified property must be completed in 180 days.
If these dates are missed, you are subject to having the 1031 crumble and required to pay taxes....no excuses.
Loss Of Negotiating Power
Because of the strict deadline rules, investors are basically forced to do whatever it takes to satisfy the 45 & 180 day timelines. This includes relinquishing their negotiation power when buying that replacement property. Brokers representing the now buyer are not much help. In fact, I've seen time after time where my colleagues literally advertise that the buyer is willing to overpay for a property simply to satisfy the 1031 rules. Say What??? Yes, it's true.
Once that seller learns the investor MUST BUY or PAY TAXES…there is no reason for them to lift a finger.
Settling For A Property To Avoid Paying Taxes
We talk with investors on a regular basis and one would be surprised at how may say that if they knew what they were getting into with the replacement property they purchased, the never would have sold their previous property.
Investors Want To Sell But Just Don't Want The Headaches Of A 1031
Many investors would love to sell their investment building and cash out. However, they are of the opinion that the only way to "get out" is through a 1031 Exchange. They are simply unaware of their other options, like the Monetized Installment Sale.
Does This Sound Like You?
Do You Feel That Your Only Way Out Is A 1031 Exchange?
Are You Frustrated & Ready To Throw In The Towel?
WE HAVE THE ANSWER!