Zoom Call 2.22.2022 with David Moore on 1031 Exchanges
The Zoom call this week offered insights into a section of the IRS Tax codes that allows a taxpayer to defer capital gains on the sale of real estate and certain types of properties as a 1031 Exchange. David Moore has been working with clients on this type of wealth management and with brother Tom founded Equity Advantage, Incorporated, a nationally recognized leader in 1031 Exchange facilitation in 1991.
He demonstrated an extensive knowledge in the process and offered up several unique examples on how individuals were able to sell off their properties and with proper guidance reinvest the profits through the 1031 exchange to minimize tax liabilities.
The 1031 Code is over 100 years old and what the facilitators do is take the proceeds from a real estate sale and then turn it into an exchange by helping the original purchaser make an acceptable purchase all within the 45-day time span.
The 1031 exchange allows an investor to take proceeds and reinvest them ultimately for comparable value in real estate. The comparable value, however, does not necessarily mean taking $750,000 of profit, after the IRS qualified deduction of $250,000 or $500,000 depending on family status, and making a very large purchase.
Not all sales would qualify for a 1031 exchange. A flipper property would most likely not be protected. A multifamily investment property for a couple would have the basis as the intent when purchased was residence and investment as well.
He offered up a couple of examples. In one, an investor used the proceeds to make a purchase of 26 housing units, or condos, to evade the taxes and allow for the purchase to become a sheltered investment which could be improved, collect rents and allow for appreciation for sale sometime down the road.
The message was that there are ways to take real estate sales and protect the profits from high taxes. He did caution that a person needs to seek out a qualified resource to work the exchange as there are tax and legal ramifications and using a person to attempt the exchange while learning the process should be avoided.
At the end of the call, I did a quick search for 1031 Exchange specialists in Connecticut. It did bring up David's company, Equity Advantage Incorporated, as well as several large investment houses. His caution was to make sure that the source that was used was more than a 1-person operation and time is of the essence once the exchange is started.
There are additional videos on their YouTube channel:
YouTube Channel: https://www.youtube.com/c/EquityAdvantage1031Exchange
It was another highly informative call and try as I might, I just didn't have a quick enough pen or mind to capture all that was offered
Zoom Call 2.22.2022 with David Moore on 1031 Exchanges
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