THERE ARE WAYS TO RESCUE FAILING EXCHANGES AND DEFER CAPITAL GAINS TAXES WITH MORE FLEXIBILITY AND WITHOUT HAVING TO DO AN EXCHANGE.
ARE YOU STUCK IN A 1031 EXCHANGE SYSTEM? Systems. Life all around us is built on systems that help to organize, measure, or are simply to be applied as a way of doing things. Putting a system into place is supposed to help increase efficiency and success. Some systems work fabulously. Some turn out to be really bad. And in some cases, a particular system could work fabulously in one scenario and be a disaster in others.
In the world of real estate, investors often operate in a system that utilizes 1031 exchanges. These exchanges are a means to buy, sell, buy, sell and continue to add to one’s wealth via real estate. It’s a great way to build wealth. Some live by the mantra of “swap until you drop,” which means you keep exchanging real estate through 1031 exchanges. Then, when you pass away, the step up in basis will eliminate the capital gains taxes for your heirs. It’s a great plan. However, not everyone wants to keep their real estate through their retirement years. They want to eliminate dealing with the “tenants, trash, and
toilets.” They also have other personal needs and goals that they want to use the funds for. But they feel like they are stuck. Either they keep the real estate with all of the weighty burdens that they want to eliminate from their life or pay all of the significant capital gains taxes that have accumulated for decades. They feel stuck in the 1031 exchange system. Most investors are not aware that they do not have to be stuck in that system. There are ways to rescue failing exchanges and defer capital gains taxes WITH more flexibility and WITHOUT having to do an exchange.
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