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Reasons to Consider a 1031 Exchange Program

When it comes to taking advantage of the 1031 exchange program, there is no denying that you can obtain several benefits from it, but at the same time, it also comes with a lot of technicality stuff and complicated requirements, which means that you have to learn more about it first before actually considering it. If you’ve been stressed out as of late because of putting your money in an investment property which isn’t making enough profit or you simply just want a change of investment scenery, you obviously are already aware that an upgrade or switch to another property remains a decent option. But the thing is it also cannot be denied that there are so many requirements to fulfill just to do this.

Because there are various unique factors to weigh in, including technicalities associated with closing the sale and paying taxes, it is, therefore, smart to acknowledge that the process in its entirety will be difficult. The good news is that there is a very convenient and practical way to take care of the tax issue. What we’re talking about is the sale and purchase of a property as a 1031 exchange. Now if you aren’t aware of this option, then you must continue reading the reasons below on why you should consider it.

1 – You no longer will be required to pay capital gain taxes once the property is sold.
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The primary reason why you’re not even seriously contemplating the sale of your old investment so that you can buy a new one is because you’re aware of the fact that you will be forced to pay the taxes and fees as a result of the sale. But by availing the 1031 exchange program, you can actually make a successful switch to a different property but with the same value, but this time, there no longer is a need to burden yourself with the usual taxes you need to pay.
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2 – You have the luxury to choose from a wide range of options.

Another practical reason to consider 1031 exchanges is the fact that there are various ways on how to conduct it. The most common options include selling your old investment property and finding another one within a prescribed period or what is referred to as delayed exchange, the one in which you buy a new property first before you sell your old one or reverse exchange, and trading your property with another property on the same day or simultaneous exchange.

3 – It’s obviously the easier way around.

At the end of the day, you just have to realize that opting to conduct a 1031 exchange is the most effective and practical way of buying an investment property and at the same time ensuring that you’re taking full advantage of the tax deferral program.