am tired but feeling great.  It is always an experience for me to discuss 1031 like kind exchanges with so many Realtors with different personalities, varying knowledge levels and backgrounds.  Though I do talk with many Realtors able to discuss the finer points of the 1031 exchange, the common response seems to be, "Oh yeah, that tax thing...ugh!". 

Now, I do realize that matters of taxation may not be discussed at dinner parties or be brought up to "lighten the mood" in conversation (unless you are me).  But this is an exciting topic!  Each one of us, if we had a chance, would do anything it took to NOT pay Uncle Sam taxes we did not have to.  I am talking legally, here!  I am sure if I asked for comments, many of you reading this blog would testify to the fact that a 1031 is a great tool for your personal financial growth.  So those of you, who are Realtors, I am sure take every opportunity to share this with your clients selling business or investment property.  You would never say to them, "Oh yeah, that tax thing...ugh!".  After all, you are truly there to assist your clients the best you know how.

Let's get to my point.  If you are truly striving to be the best representative for your client, just as I try to do for mine, we realize we need to learn each and every day.  We are not unteachable, but by choice.  When I meet someone unwilling to learn or who closes themselves to the idea of 1031 Like Kind Exchanges, I feel bad for both that person and their clients.  Please realize I do not take it personally, this has nothing to do with me, but I would hope my real estate agent is as learned as could be.

Can the agent who capitalizes on the ideas and advantages of 1031 exchanges benefit?  Absolutely!!!!!!

Not only will they help their client, but through the client, help themselves.  Let us give an example:

CLIENT NOT DOING AN EXCHANGE

Client sells property and nets $750,000...

Client pays capital gains tax of 15%...$750,000 - $112,500

Client is left with...$637,500 cash to invest

If they leverage this amount at 25%....Proposed acquisition of $2,550,000

CLIENT DOING AN EXCHANGE

Client sells property and nets $750,000...

Client pays NO capital gains tax because of the exchange...

Client is left with...$750,000 cash to invest

If they leverage this amount at 25%...Proposed acquisition of $3,000,000

This mean they have purchased $450,000 more property WITH A 1031!

Is this good for the client?  YES

Is this good for you?  YES

Why?  How much more would your commission be on the $3,000,000 sale?

This does not take into account the fact that a 1031 Exchange also defers:

State Tax

Depreciation Recapture (Huge Plus here!!)

Meaning even more money becomes available to the taxpayer to purchase property.  With one side-note, if your client had more cash equity to place into the deal, do you think this may make financing easier for the client?  I realize that financing is never an issue with real estate and certainly financing, or the lack there of, has never broken an deal! 

Not only this, but let's talk about one more advantage and I will digress.  As many of you know, your client faces time-lines in their exchange.  There is the 45 days they have to identify potential replacement property and the 180 days to close on any or all of the identified property.  If you are helping the client sell their property, and knowing all along the time-frames they are facing, would it benefit you to immediately help that client find replacement property?  Sure it would.  Not only would you then benefit from the sale of their relinquished property, but now you may be able to sell them one, two, three...replacement properties!  Your commission just multiplied because you were aware of the 1031 Exchange and how to help your client through.

Okay, I could go on, but I think you get the picture.  For those of you who are taking advantage of the 1031, keep going!  Like you need me to say that.  But for those of you who have been shunned this wonderful tax-savings tool, give it a chance!  I never make empty promises, so this promise I make, your real estate career could turn that corner your always wanted if you would put into practice the simple process of a 1031 Like Kind Exchange.

If I can be of any help as in writing about specific topics or giving a general overview, please let me know.  I want to blog only those things which will help our wonderful community here grow!