(707) 431-8898 dieter.thurow@npbfg.com

#1031 EXCHANGES

Why Exchange CA Rental Properties?
Why Now?

Many landlords don’t want to deal with Property Management hassles — Tenants-Toilets-Trash! This is especially true as they get older and want more freedom to enjoy their lives.

NOW might be an opportune time to consider a Tax Deferred Exchange with California passing legislation on Statewide Rent Control , Mandatory Section 8 Housing, Expanded Tenant Rights, which take effect on January 1, 2020. More hassles, reduced income, lower property values!

Defer Capital Gains Tax
Save Other Taxes

Most property owners would like to avoid paying taxes on the sale of appreciated properties. Section 1031 of the Internal Revenue Code allows for the deferral of Capital Gains Tax upon the exchange of real estate such as Rental Properties.

Several other taxes incurred in a sale that COULD BE SAVED in an exchange:

• Depreciation Recapture is taxed at a 25% rate
• California Taxes Capital Gains at Ordinary Income Tax Rates
• Ordinary Income Tax bracket may increase as a result of the sale
• 3.9% Affordable Care Act tax may apply

Why Exchange CA Rental Properties?
Why Now?

Many landlords don’t want to deal with Property Management hassles — Tenants-Toilets-Trash! This is especially true as they get older and want more freedom to enjoy their lives.

NOW might be an opportune time to consider a Tax Deferred Exchange with California passing legislation on Statewide Rent Control (SB 329), Mandatory Section 8 Housing (AB 1482), Expanded Tenant Rights (AB 1481), which take effect on January 1, 2020. More hassles, reduced income, lower property values!

Defer Capital Gains Tax
Save Other Taxes

Most property owners would like to avoid paying taxes on the sale of appreciated properties. Section 1031 of the Internal Revenue Code allows for the deferral of Capital Gains Tax upon the exchange of real estate such as Rental Properties.

Several other taxes incurred in a sale that COULD BE SAVED in an exchange:

• Depreciation Recapture is taxed at a 25% rate
• California Taxes Capital Gains at Ordinary Income Tax Rates
• Ordinary Income Tax bracket may increase as a result of the sale
• 3.9% Affordable Care Act tax may apply

How Exchanges Work in 4 Steps

01

Owner sells the property and includes certain exchange language in the escrow instructions

02

At the closing, all sale proceeds are deposited with a Qualified Intermediary (QI) in order to avoid taxable “boot” to the seller

03

Seller has exactly 45 days from the close of escrow to identify the potential replacement property(ties)

04

Seller has to complete the purchase of the replacement property within 180 days of COE by instructing the QI to release the money for the purchase of the replacement property(ties).

Other Exchange Requirements:

  • Replacement property must be of equal or greater value
  • Replacement Property must have equal or greater debt
  • All proceeds must be reinvested to make the transaction completely tax deferred

 What We Do!

We specialize in the Strategic Diversification of 1031 Exchange Proceeds. It’s our goal to Defer and Save Taxes,  Preserve Income, and find suitable Re-investment Opportunities.  Specifically, we provide the education, tax and real estate expertise, relationships, connections, and personalized guidance that the owner/investor needs to successfully navigate through this process.

To discuss the relevant IRS guidelines and have your questions answered, call Dieter Thurow at 707-431-8898 or send a confidential email to dieter.thurow@npbfg.com

 

“Our Financial Life is a Journey, not a Destination. Let a Trusted Advisor guide you!”