Why Consider a 1031 Exchange?
There are a multitude of benefits to a 1031 exchange including:
Property that is sold or transferred for gain can be subject to taxation. A properly-executed exchange offers investors the opportunity to hold onto their equity without being subject to heavy capital gains taxes.
A 1031 exchange provides an investor with the opportunity to diversify his or her investments regionally and characteristically. An apartment building in Los Angeles, for example, can be exchanged for an investment condo in Portland, Oregon and a small shopping strip-mall in New York, New York.
A common challenge among family members who inherit a large piece of real estate is agreeing on what to do with the property over time. A 1031 exchange provides family members with the opportunity to acquire several properties in exchange for one large property enabling each family member to realize his or her individual investment objective.
Active investors may amass several diversified investment properties over a period of many years. Managing and maintaining a group of properties can become cumbersome. Through a 1031 exchange, a far-reaching group of properties can be exchanged for a single property with an onsite manager thus making management and oversight a much easier process.