Selling South & East San Diego County Properties

IRS 1031's & TIC Exchanges


LarryAndTere.com Realtors can connect you with IRS 1031 Exchanges. Thru our affiliation with various exchange trading groups, at the local and national level, we are able to help investors achieve their financial goals. This also works very well for properties that are considered difficult to sell or have a limited market appeal! Additionally, Institutional-Quality TIC Investments: Prime real estate investments which offer a more stable yield, lower downside risk, and solid 1031 Exchange solutions, are a great vehicle for investors who are tired of the day to day management of property.Read more about both below and contact us today with any questions!

WHAT IS A §1031 EXCHANGE?

Thanks to IRC §1031, a properly structured exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes. IRC §1031 (a)(1) states: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment." To understand the powerful protection an exchange offers, consider the following example:
  • An investor has a $200,000 capital gain and incurs a tax liability of approximately $70,000 in combined taxes (depreciation recapture, federal and state capital gain taxes) when the property is sold. Only $130,000 remains to reinvest in another property.
  • Assuming a 25% down payment and a 75% loan-to-value ratio, the seller would only be able to purchase a $520,000 new property.
  • If the same investor chose to exchange, however, he or she would be able to reinvest the entire $200,000 of equity in the purchase of $800,000 in real estate, assuming the same down payment and loan-to-value ratios.

As the above example demonstrates, exchanges protect investors from capital gain taxes as well as facilitating significant portfolio growth and increased return on investment. In order to access the full potential of these benefits, it is crucial to have a comprehensive knowledge of the exchange process and the IRC. For instance, an accurate understanding of the key term like-kind - often mistakenly thought to mean the same exact types of property - can reveal possibilities that might have been dismissed or overlooked.       Courtesy of Asset Protection, Inc.

 

Tenant In Common (TIC) Investments

 

Tenant In Common (TIC) real estate investments enable individuals to acquire a fractional interest in large retail, office, multi-family, or industrial properties. It is an opportunity to own quality real estate, step away from day to day property management, and still satisfy IRS 1031 tax-deferred exchange requirements.     The key is fractional ownership. A group of investors is organized, or “sponsored,” under a TIC structure and, as a group, is able to acquire a large commercial property.   TICs are ideal for investors tired of day to day property management, but still attracted to the benefits of real estate ownership. TICs share the tax and wealth preservation benefits of sole-owned real estate, offer the same or better cash flow, and eliminate the headaches of day to day property management.
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