1031 Exchange Explained: A Real Estate Strategy For Investors
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- เผยแพร่เมื่อ 22 พ.ค. 2024
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In this video, Toby Mathis, Esq. will explain how a 1031 Exchange works and how you can benefit from it for real estate investing.
The 1031 exchange is a real estate strategy that many use to improve their performance in the market. If you’re not familiar with the 1031 exchange process, it is a way for real estate investors to sell an asset and reinvest the capital into another one without paying taxes on the profit. The idea is that your profits are put towards another asset and then when you sell that new investment, you’ll be able to claim all of your costs back.
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Show Notes:
0:00 Intro
0:12 Where 1031 Exchanges Take Place
5:34 Qualified Intermediary
9:15 QI Timeline
9:54 Scenarios
14:38 1031 Exchange in California
32:33 Outro
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ABOUT TOBY MATHIS
Toby Mathis, Esq. is the best-selling author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Toby is a tax attorney and founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. Learn more at aba.link/tobyaba
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#tobymathis #1031exchange
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I found this video super helpful. Thank you for sharing!
No wonder you have 340k subs.
Your content is 🔥
Great explanation of 1031 exchanges.
I know a video is very informative when I have to back it up several times to understand what is being said. Well done!
Me too lol.
thank you so much for your video
All gems 💎 my guy! I feel like I owe you an hour consultation. Keep up the great work.
Thanks
Thanks! : )
Oh California! How I love and hate you at the same time😂. Great video got me laughing and learning at the same time! Thank you for the education! Looking forward to doing business with you sometime within a year from now. Just subscribed! Much respect to you! 🤙🏽
Thanks for the video. Question: we bought a home in 2016 and kept our old home, but haven't rented it out during that time (a long story). Our new home has doubled in value from 500k to over 1M. so we could sell and use the 121 exclusion on the new home, no problem. My question is regarding the first home: as it WAS a primary residence but no longer qualifies, will it be considered investment property if we rent it out, then be able to do a 1031 exchange? We are looking to leave the state soon and would consider divesting all holdings. We also own some land that has been rented since 2006 and is worth about $500k.
Can we buy with a loan on the replacement property? Or all the proceeds have to go back into the replacement purchase?
Thank you Sir.
Great video. Thanks for creating.
Does the tax obligation amount change with the tax laws & percentages every year, or does the amount owed stay static over time? A 50k debt won't sting as much in twenty years as it does today, even if a 1031 deferral comes due at that time.
hello toby, my understanding of the 1031 exchange is that i can not 1031 from SF to MF. Is this correct?
So I have an Airbnb that’s still under my name, will it still work or do I have to transfer it to an llc? Also, if I buy a duplex, can I live in one?
example can I buy 10 properties as long as it does not exceed 200% of the sale??
Where do I find a QI ?
Great video, but no one talks about after you do the 1031 and you sell - what about the deferred gain? Not everyone is going to exchange for the rest of their lives. Can you cover that in a video one day? thanks for all of your video I watch them weekly and share with other CPAs
Great suggestion!
Question: can a sibling buy property from another sibling and put into a 1031 exchange? I am thinking of a client that wanted to do this when commercial was allowed not just residential (immediate family members were excluded as the seller or buyer).
@@notmeee7302
O2cbxlv
If you defer, defer, defer then sell you're liable for all of that deferred gain. You might need to do a lazy 1031 in that case but I think it'd make more sense to refi.
How do I find a “QI”
Looking for a QI...Not all can be trusted...Do you know someone in Long Beach area...
Thank you! I had been looking at a 1031 for years. As my father-in-law died and left a property worth $1.4M that my in-laws bought in 1973 for $45,000. I think this can be transferred and sold as the stepped up basis of the property is $1.4M - the value when he died. (My mother in law died 19 years ago.)
You're correct you will have a step up, so no need for the 1031. 1031 would be benificial if you are trying to defer the taxes on real estate that you would realize a gain or loss on the sale of the first property and turning around to use those proceeds to buy a second property. When you have a step up and your basis which would be the FMV and what you sold it for are the same you will not show a gain so no need to 1031 if you just want to pocket the money.
great video! quick question, if i'm selling a property in state A and buying in state B, do i get my QI from state A or B?
Great question, in order to assist you further, I highly recommend you request a free 45-minute consultation to discuss our proven asset protection and tax strategies and how they apply to your unique situation. aba.link/aa50fa
My Situation: I want to sell my rental in Austin (had it for over 5 years - it was never my primary residence) I would like to buy my primary residence in Orlando ... BUT.. under the Like-Kind rules, I have to acquire the Orlando property and rent it out. I have to hold it as a rental for how long before I can move in????
How does the California state treat the property tax for the replacement?
That's a good question. The treatment of property tax for replacement properties in California can vary, and it's essential to navigate these intricacies effectively. To provide you with accurate information tailored to your situation, I recommend scheduling a free strategy session. You can start by visiting aba.link/aa50fa
Does a flip property qualify as investment property or does it have to be rental? What about airbnb it for 3 months?
Any property that is not your primary residence is considered an investment property.
Is it better to buy the replacement property first and then sell your existing property within 180 days in today's market? Doing it the other way around limits you to 45 days to find a replacement property, which can be risky given the competition. Additionally, if a property you identified within 45 days gets sold to someone else, can you identify a new property on day 46?
Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby
is there any way to shelter the capital gains on an investment property? i have investment property (that has been rented for last 3 years) where my basis is 300k and it's worth 1mm now. am trying to sell to build my retirement home.
What if you end up buying a property that was not one of the properties you identified in the 45 days? Maybe the three you identified were sold to someone else. Can you still do the 1031 exchange with a property that you didn't identify?
That’s a good question, and one I’d like to know also. It’s a shame you didn’t get an answer.
@@chrischamberlain7628 the answer from my attorney was no. It has to be one of the properties you identified.
Could you do it with a retirement account property? Like I have an condo inside my solo 401k
Why would you? If it’s in a 401 then it’s tax deferred or free if it’s Roth.
Yes, you generally can utilize a 1031 exchange with real estate held in retirement accounts. With that said, 1031 exchanges simply defer taxes. 401ks and traditional IRAs already defer taxes on the assets they hold, so a 1031 may not have much of a benefit depending on the circumstances. If the real estate was acquired by the retirement plan with debt financing, then there may be more of an incentive for a 1031 exchange due to the taxation of debt-financed income in retirement accounts.
Here is my question, can I 1031 exchange 4 investment properties for one larger property such as a apartment building.
I would set up a free strategy session with my team to get the specific answer that is unique for your situation. Visit: aba.link/aa50fa
Toby, can I 1031 exchange my rental property through you to build 2 new homes on an undeveloped lot? I would live in one and subdivide and rent the other using California SB 9. I have not purchased the lot yet and would want to include in the exchange. The cost of the new homes would be more than the money received from my rental sale so would be adding additional funds.
Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby
Where can you find QI?
There are a ton of good ones - just look up 1031 intermediaries online and interview a few. Your realtor will likely have a bunch they have worked with as well.
180 days or till due date of tax return, make sure to file for extension
What kind of property tax will the new property responsible for? How does that work?
Great question! The specifics of property taxes can vary based on location and property type. To provide you with accurate information tailored to your situation, I recommend scheduling a free strategy session. Visit: aba.link/aa50fa
can you 1031 into an existing property to upgrade the property?
Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby
I have 700k equity in a house I lived in for 10 yrs now. I want to use this to build a house in the mountains. I have to use the equity proceeds because I cant get a loan to build the new home. New home value will be around 300k. How do I do this without paying capital gains taxes. Married filing jointly.
Can I buy more than 3 investment properties ?
The real issue is when you identify replacement properties. You can buy more than 3, but you must identify replacement properties within 45 days. If you want to identify more than 3, the two rules are the 200 percent rule and the 95 percent rule (you only need to meet one of them):
Under the 200 percent rule, investors have the flexibility to identify multiple replacement properties, with the caveat that the total value of these properties should not surpass 200 percent of the value of the sold property. For instance, if the property sold for $1 million, the total value of potential replacement properties identified should not exceed $2 million.
The 95 percent rule gives investors the liberty to identify any number of replacement properties without a cap on their combined value. The critical condition here is that investors must then go on to purchase at least 95 percent of the aggregate value of the identified properties. So, if an investor marks properties amounting to $2 million, they are required to purchase properties worth at least $1.9 million, which is 95 percent of the total identified value.
Hope this helps.
Thanks for your help @@TobyMathis
Excellent ideas. Thank you for teaching us the fools
Glad you like them!
Selling for 800k, have a 300k loan to pay off. Can I invest 200k of the remainder in a new rental and then anticipate paying taxes on the 300k we stash in the bank?
Great question, I'd recommend setting up a consultation for a specific answer. Visit: aba.link/aa50fa
Buy it, see it appreciate, sell it, pay the tax, and spend the money. At least you see most of the profit. With a 1031 carried to the usual no-taxes-ever extreme, somebody else gets all of it. (Spoken from the situation of a child-free person.)
Your videos are very informative but too long. Try to trim the length but keep up the great work.
Hey Randy! Thank you for your feedback.
What if you die can the state still come after the tax from your heirs
Not w. Current rule of inheritance at the Stepped up basis afaik...
Can my LLC purchase real property , from. Me, that I own as my primary residence?
While legally it can, there are only a few limited circumstances where that is the right decision, one such being when you are transitioning the property from a personal residence to a rental or investment property. Otherwise, a land trust is a good option to maintain anonymity and the homestead exemption.
i thought raw land was not allowed
Learn how to use the IRS tax code to your advantage and keep more of what you earn during this free webinar. aba.link/oyf
That's sounds scary in today's market. Sounds good but if your renters refuse to pay and we end up in a lock down again, then what? .... I need something else as single person.
Good point - or closing unexpectedly delayed for a replacement property while the clock is ticking
Where is the best place to look for QI?
I would talk to your local realtors as they like drama-free QIs:-)
Buy borrow die.
If you’re paying tax on real estate it’s because you don’t have enough AKA get your bread up 😂
Dang, i dont like this method.
There has to be a simple way to explain this crap. I'm going to check out Bigger Pockets 5 minute video about the same subject
It’s already simple. His explanation is straightforward and easy to understand.
Good grief can't understand any of this period he needs to learn how to communicate better
How do I find a QI?