Robert Tweed shares five benefits of 1031 Exchanges and how they work.
Robert Tweed teaches new property investors how to defer taxes. He first learned how to perform a 1031 Tax-Deferred Exchange in 2004 when working in Monrovia, CA.
Five 1031 Exchange Benefits
Investors can use profits from a current property sale to purchase another piece of business real estate. When this happens, the buyer can defer federal tax payments. Robert Tweed reveals these benefits of 1031 Exchanges.
- To Free Up Capital
According to Robert Tweed, not having to pay taxes right away can free up money for down payment use. This allows an investor to acquire potentially more valuable property. It also can shift finances needed for maintenance and upkeep.
After all, not all properties require the same amount of work before sale. Besides, one type of 1031 Exchange opportunity exists to re-purpose funds for property construction or improvement.
- To Minimize Risk
Risk minimization occurs when diversifying investment types. For instance, an investor could possibly secure a well-kept property that costs less to maintain. This same piece of real estate could even provide a rental income for the owner. Therefore, a 1031 Exchange increases ROI and provides operational funds for future property flipping projects.
- To Build Portfolio
A successful 1031 Exchange adds one more sample to add to an investment portfolio. It demonstrates wise buying and selling moves, especially if the transaction turns a profit. This will attract new investment clients who also need help with property buying and selling.
- To Prepare Inheritances
In case of bereavement, future heirs may not have to pay deferred taxes. Along with receiving the property at the current marketing value, a 1031 tax deferment could protect future generations from financial ruin.
- To Relocate Easily
Investors sometimes move across the country or to another state. Whether for business or personal reasons, they now can take advantage of new opportunities at their new place of residence. It prevents IRS trouble when living in a new state.
How do 1031 Exchanges work?
To this question, Robert Tweed might answer, “It’s complicated but not impossible.”
Several rules apply when setting up a 1031 tax deferral exchange. The new property must match with the purpose of the one currently owned. However, quality does not matter. In some cases, an Exchange between one new property and multiple currently owned properties also happens.
The 1031 Exchange also must include only business real estate of greater or equal value. An investor needs to also make this transaction in the same taxpayer name. That buyer also has 45 days to select a new property.
Robert Tweed has helped investors set up IRS 1031 Exchanges since he first learned how in 2004. He used to work in Monrovia, CA for a CPA. That’s when Tweed met the person who paved the way for him to perform more than a hundred 1031 Exchanges totaling more than $500 million.