One of the tools HeimLantz can provide for tax deferment is a 1031 Exchange. Our approach to the exchange utilizes the experts at HeimLantz Wealth Management to create a holistic plan for your investment portfolio.
What is a 1031 Exchange?
A 1031 Exchange allows you to defer capital gains taxes by using the proceeds of a property sale to buy a similar one within a specified amount of time. These are considered like-kind exchanges and can include, but are not limited to, the types of properties listed below:
- Commercial properties
- Single-family or multi-family rental properties
- Land
- Vacation homes
- Tenant-in-common interests
What are the benefits of 1031 Exchange?
Ultimately, tax deferment is the primary driver of the exchange process, but there may be other strategic considerations for facilitating a 1031 Exchange.
The following are some of the benefits to consider:
- Retain ownership in real estate without the hassle of property management
- Generate income
- Property type change
- Investment location change
- Portfolio diversification
- Active versus passive management
What is the timeline of a 1031 Exchange?
How do I start the process?
The first step is contacting a trusted advisor from the HeimLantz team. We can take you through a more detailed conversation regarding the process and the properties available at the time of your exchange.
Is there more than one type of 1031 Exchange?
Yes. Executing a 1031 Exchange requires strategic planning to find the right timing and the right property that makes sense for you. Working with an experienced advisor can offer opportunities beyond a traditional exchange that you may not have considered.
For example, a 1031 DST allows you to enter into a Delaware Statutory Trust that provides fractional interest in a property with multiple owners.
This is just one of the types of strategic alternatives we like to provide our clients at HeimLantz.
What are the drawbacks of a DST 1031 Exchange?
- 1031 DST investors give up control. With a 1031 DST, you give up that control and let a national institutional property manager do all of the landlord duties.
- The 1031 DST properties are illiquid
- Cost, fees, and charges
- You must be an accredited investor
- You cannot raise new capital in a 1031 DST
- Small offering size
- DSTs must adhere to strict prohibitions