Benefits of Using 1031 Exchange Services

The 1031 exchange is a legal procedure that is named from section 1031 of the Internal Revenue Code, which allows you to sell your investment properties and exchange them for new ones, and the capital you gain between it is exempt from taxes. It is important to note, however, that these property exchanges can only be made on like-kind properties, and the Internal Revenue Service states the limits within which you can use the 1031 exchange on vacation properties.

There is practically no limit to how many times you can make use of the 1031 exchange, which means that you can continue to sell and exchange properties as long as you hold onto them for two years. The more you make use of the 1031 exchange, the more your initial investment will multiply, and you will be able to make a hefty profit on it.

There are several benefits of using 1031 exchange services, in addition to the tax saving that can be made through them.

Resetting Depreciation

One of the biggest advantages of utilizing the 1031 exchange service is that you don’t have worry about your real estate assets depreciating over time. It is common for real estate to wear down over time, and this is especially true for residential properties. Generally, you can claim depreciation as an expense on your properties and not pay taxes on them, but if you sell the property, the depreciation will be recaptured. By making use of the 1031 exchange, the depreciation expense is carried forward to the new property, and the tax is deferred up till the point a taxable sale of the new property takes place. Cash

Given that the exchange you make on real estate will give you a good amount of capital saved from taxes, your general cash flow will significantly increase. And since your capital is only increasing thanks to exchanging properties and not having to pay for their depreciation, you can earn a good income through owning various properties as well.

Benefits for Beneficiaries

Once you start making use of the 1031 exchange service, you will not be paying the taxes that have been deferred until the point of sale. However, if the exchanged property is held onto for a long time by the investor, in the event of their death, the deferred tax will be nullified. The property and its profits will all go to the beneficiary. This can be a great way to build generational wealth if you want to play the long game.

Full Service 1031 is a Utah-based limited liability company that has over 30 years of experience in the finance, real estate, and 1031 exchange industry. They are one of the most trusted and qualified intermediaries for 1031 exchange, and they are dedicated to helping their clients reach all of their financial goals through the means of this property exchange service. If you are looking for an intermediary that can provide you with 1031 exchange services, you cannot go wrong with Full Service 1031.