By Jason Salmon, Senior Vice President, Kay Properties & Investments
Many investors are reluctant to sell investment property. And they usually have a good reason, whether it’s missing a future appreciation, having to pay a massive tax bill, or other factors. However, it can often be a good idea to sell your property through a real estate investment alternative that makes your life easier and allows you to defer taxes through a 1031 exchange. So let’s look at six reasons you might want to consider when making a 1031 exchange. the sale and reinvestment in this alternative.
Reason 1: You are tired of actively managing your investment property
Let’s face it, property management is often a “real” pain. You have to keep an eye on the ball 24/7. And dealing with tenants, clogged toilets and garbage only gets old after a while. Sometimes even the sound of a ringing phone can dread you.
Of course, you can hire a property management company to handle most of the details, but it comes with its own issues and can cost you a large chunk of your rental income. But imagine if you could keep investing in real estate while eliminating all of those hassles and costs. The good news, you can. You may ask, how? By investing on a fractional basis in a carefully selected portfolio of income-producing real estate investments that you do not have to manage or have someone else manage for you. Instead, you can just relax and enjoy your life while someone else takes care of all the worries and hassle. I’ll tell you more about the alternative that lets you do that in a moment, but let’s take a look at the next reason first.
Reason 2: You can profit from passive real estate investing for ongoing income without the need for management responsibilities
When you invest in real estate as I will show you, you will be a true passive investor. You literally won’t have any responsibility for managing your property and you won’t have to worry about the day-to-day hassles. Now there is someone else’s problem. And that means you’ll have more time and more energy for your family, friends, and hobbies. Better yet, you will feel better thanks to the reduction of stress and you will be more pleasant to be around.
Reason 3: You can realize the value of your property now rather than later
Many investors I speak with like the idea of selling investment property and realizing its value. However, they don’t want to pay taxes, nor do they want to spend the time and effort looking for a new property to invest their money in. These are two of the things that make fractional investing in a real estate portfolio so appealing. You don’t have to spend a lot of time looking for a new property – it’s all done for you. Better yet, by reinvesting your money with a tax-deferred 1031 exchange, you can get on with your life.
Reason 4: You can quickly and easily become more diverse
Imagine if you could easily spread your real estate investments across different types and sizes of properties in various geographies. You would have instant diversification that many investors appreciate, especially in these uncertain times. That’s a good thing about fractional real estate investing which I’ll tell you about in a moment. They are standalone real estate investments in a variety of locations. And we’ll help you choose the properties that are right for you.
Reason 5: You have the opportunity to invest in larger real estate transactions
One of the best things about fractional ownership of real estate is that you can, if you want, get shares in larger real estate deals than you currently do. You might like the prospects for a certain type of real estate, but thought it was out of reach due to the size of the investment required. But now, with fractional ownership, you can get a share of just about any type of real estate investment you like, no matter how small. And I’ll show you how in a moment.
Reason 6: You can use a 1031 exchange to defer taxes when you sell your property
Sometimes the tax code makes sense. And one of those opportunities is with 1031 exchanges, which allow you to sell a property for a big profit and defer taxes when you move your money into a “like-for-like” property. Most investors see “like-kind” as an overwhelming limitation, but the point is, the rules are less rigid than you might think. For example, moving from a building to a vacant lot may not seem like a “same kind” exchange, but the rules allow it. However, there are time limits that must be followed carefully. For example, you need to identify a replacement property within 45 days of selling your property, and then you need to close a new real estate investment within 180 days of selling your property. It is generally a good idea to work with a 1031 exchange specialist to make sure that you are following Internal Revenue Service rules and that your transaction is completed on time.
Find properties that match your investment goals
Kay Properties and Investments specializes in 1,031 exchanges and we will work with you to find the property (s) that match your goals as an investor. We also offer you the option of making fractional investments in these properties. This property allows you to invest passively without any of the responsibilities of active management. It also allows you to diversify your real estate portfolio far beyond what you currently do, and you can defer taxes on any properties you sell.
Please contact Kay Properties and Investments to better understand how you can use Exchange 1031 to get all of these benefits and more. For more information on how the 1031 exchanges work and your available investment options, please visit www.kpi1031.com. Upon registration, you will receive a free book on 1031 Delaware Statutory Trust stock exchanges and properties. You will also find valuable information when deciding on the right strategy for your specific 1031 exchange.
Kay Properties is a Delaware Statutory Trust (DST) national investment company. The www.kpi1031.com platform provides access to the DST marketplace of over 25 different sponsor companies, custom DSTs only available to Kay customers, independent advice on DST sponsor companies, due diligence and verification of each DST. The Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have been involved in over $ 15 billion in DST 1031 investments. For an overview of property types DST that investors use for estate planning purposes, please visit the Kay Properties Marketplace at www.kpi1031.com. This document does not constitute an offer to sell or a solicitation of an offer to buy securities.