RENT Magazine Q2 '22

DEFER CAPITAL GAINS WITHOUT A 1031 EXCHANGE Quite often, owners of highly appreciated real estate assets feel very stuck. They want to sell their holdings for many reasons, including the fact that they no longer want to deal with the tenants, trash, and toilets that come with being a landlord. However, a 1031 exchange might not necessarily accomplish their goals. They believe that they either must do a 1031 exchange or pay the tax, but there are more options.

Those objectives conflict with the 1031 exchange laws that require that you replace the property you sold with a like-kind property of equal or greater value and equal or greater debt. There is no flexibility. However, there is hope! A capital gains tax strategist can advise a landlord on a variety of investment tax approaches. These professionals differ from CPAs or Enrolled Agents. They focus on helping clients with alternatives to a 1031 exchange. Some of them will focus on one or two strategies while others will suggest a range of options. Capital gains tax strategists are not always easy to find, but they do exist. Sometimes, a CPA or Enrolled Agent will practice the specialty alongside their tax reporting role. However, most CPAs are simply “plug-n-play” professionals that do tax reporting only.

Goals Landlords May Want to Achieve

• Pay off debt on other investment properties

• Fund another business

• Sell during a hot and overpriced market and sit on the funds until the market cools off

• Invest with their financial advisor

• Invest in cryptocurrency

• Pay off their primary mortgage

P A G E 8 9

Powered by